More shale wells to be levied fee than first thought

citizensvoice.com/news/more-shale-wells-to-be-levied-fee-than-first-thought-1.1311520#axzz1uHygpsqW

By Laura Legere (Staff Writer)
Published: May 7, 2012

Lackawanna and Luzerne counties may get a cut of the state’s shale drilling impact fee after all.

The state’s Public Utility Commission, which is charged with collecting and distributing the fee, said its interpretation of the law allows the state to levy a fee on Lackawanna County’s two exploratory Marcellus Shale wells, at least for one year.

The same might hold true with Luzerne County’s two wells, even though they were not considered productive and were subsequently plugged and abandoned.

PUC spokeswoman Jennifer Kocher said there may be a possibility for one year’s worth of fees from the Luzerne County wells.

“It would all depend on how the wells fit into the definitions that were laid out by the law,” she said.

Encana Oil & Gas USA Inc. drilled two wells in the summer of 2010, one on Route 118 in Fairmount Township and the other on Zosh Road in Lake Township. The company announced in November 2010 that the wells were not economically viable.

Kocher said the potential for Luzerne County and Lake and Fairmount townships to get a share of the drilling revenue for the two wells depends on the definition of “spud,” or the actual start of drilling an unconventional well.

Asked what Luzerne County might stand to receive, Kocher said, “We’re not providing any numbers at this time, because we’re still scrubbing data” from the state Department of Environmental Protection.

Because Lackawanna County’s wells are considered shale or “unconventional” gas wells subject to the law, the county and its municipalities will likely get a small share of the approximately $207 million that will be collected from drillers for wells drilled prior to Jan. 1, 2012.

If all 4,802 of the unconventional wells included in the state Department of Environmental Protection’s official list are subject to the fee, Lackawanna County would receive $16,215, Benton and Greenfield townships would each get about $8,330 and all the county’s municipalities would get a portion of $12,160, according to the distribution formula outlined in the drilling law, known as Act 13.

Although the law levies a smaller fee on vertical wells – like those drilled in Lackawanna County – than horizontal ones, it does not distinguish between the two types of wells for distributing the fee to local governments. Vertical wells are assessed at 20 percent of the horizontal well fee, which is $50,000 for wells drilled before 2012 and may change each year based on the average price of natural gas.

Kocher said Lackawanna County’s two vertical wells “are subject to the 20 percent fee in year one. In year two if they are not producing at the designated levels outlined in the act, they do not have to pay the fee.”

After the law was adopted in February, the fee fate of the state’s exploratory wells and their host communities was not clear.

The law defines a vertical gas well as one that has been hydraulically fractured and produces more than 90,000 cubic feet of gas per day – a definition that the law’s architects said was intended to exclude low- or non-producing wells that are used to assess the quantity of gas in an unexplored region of the shale.

But the law defines an “unconventional well” more expansively, as “a bore hole drilled … for the purpose of or to be used for the production of natural gas from an unconventional formation,” and the state’s official list of unconventional wells includes many vertical, non-producing wells, along with inactive wells and unsuccessful wells that have been plugged.

Organizations that commented on the PUC’s draft interpretation of the law suggested different ways of dealing with the uncertainty.

Three trade organizations for natural gas producers pointed out that the law, and the PUC’s interpretation of it, is not clear about whether the impact fee would be levied on wells drilled into the shale for reasons other than direct gas production, like geologic analysis, although they suggested the answer should be no.

They also wrote that the law does not directly address what to do with “dry holes” – wells that are plugged because they would not produce economic amounts of gas. They suggested that wells drilled and plugged before Jan. 1, 2012, “owe no fee” and that any future wells drilled and plugged in the same year also “do not owe the fee.”

The Pennsylvania State Association of Boroughs offered an opposite interpretation and advocated that any well drilled and plugged in the same year pay at least one year’s fee.

“The fact that a well does not produce quantities above a stripper well or is plugged will not mitigate the impacts to the communities from the drilling of the well,” the group wrote.

The PUC has delayed issuing its final implementation order for the law in response to a court injunction that temporarily postponed some aspects of the act relating to local zoning rules.

Luzerne County Council voted 6-5 on April 16 to pass an ordinance enabling the county to accept a share of natural gas revenue if available.

Councilman Stephen A. Urban, one of the “no” votes, said council never got a definite number on how much revenue the county might be eligible for. However, he voted against the ordinance because he believes Act 13 is unconstitutional, going against the provision in the state constitution allows municipalities and counties to do their own planning and zoning.

“It wasn’t a money issue to me. It was a matter of constitutionality and a matter of principle,” Urban said.

Elizabeth Skrapits, staff writer, contributed to this report.

llegere@timesshamrock.com

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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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Pennsylvania House Votes “Sweetheart” Deal for Big Oil and Gas

www.marketwatch.com/story/pennsylvania-house-votes-sweetheart-deal-for-big-oil-and-gas-2012-02-08

Feb. 8, 2012 (Press Release)

HARRISBURG, Pa., Feb 08, 2012 (BUSINESS WIRE) — Citizens for Pennsylvania’s Future (PennFuture) condemned the passage of the so-called “compromise” drilling bill, House Bill 1950, in the Pennsylvania House today, which passed by a 101 to 90 vote. PennFuture said the bill was fast tracked to near warp speed, moving through the process from a secretly negotiated deal to passage in both houses in just days.

“This bill proves the adage, ‘money talks,’ as the governor and the General Assembly adopted everything the deep pocketed drilling interests wanted, to the detriment of the citizens, their public health, local representation, the environment, and nearly every sector of our economy except drilling,” said Jan Jarrett, president and CEO of PennFuture. “Big campaign contributions and full court press lobbying won the day against the rights and liberty of Pennsylvanians.

“The bill adopts one of the nation’s lowest extraction fees, contains weak environmental protections over drinking water and our streams and wetlands, confers special stature on the drillers over other businesses in Pennsylvania, and destroys local rights to use zoning ordinances to manage drilling and withholds funds from any municipality that attempts to use those rights,” said Jarrett. “Pennsylvania citizens will get little in return.

“Some accepted this deal for the little environmental funding proposed, but no sound thinking person would accept 30 pieces of silver for this awful deal,” continued Jarrett. “We will live with the damage caused by drilling for decades, just as we still live with the damage from abandoned coal mines and shallow oil and gas wells across the Commonwealth. And once again, the citizens of Pennsylvania will be stuck with the tab for cleaning up the mess.

“It’s clear why the governor and the Republican leadership needed to ram this bill through,” said Jarrett. “It violates the rights of the citizens, and the wishes of more than three-quarters of the voters.

“We had the opportunity to do this right, but the General Assembly squandered that opportunity,” concluded Jarrett.

PennFuture is a statewide public interest membership organization that advances policies to protect and improve the state’s environment and economy. With offices in Harrisburg, Philadelphia, Pittsburgh, and Wilkes-Barre, PennFuture’s activities include litigating cases before regulatory bodies and in local, state, and federal courts, advocating and advancing legislative action on a state and federal level, public        education, and assisting citizens in public advocacy. The PennFuture website is www.pennfuture.org and the blog is located at http://pennfuture.blogspot.com .

SOURCE: Citizens for Pennsylvania’s Future

Citizens for Pennsylvania’s Future
Jeanne K. Clark, 412-258-6683 / 412-736-6092
info@pennfuture.org

www.pennfuture.org

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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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Residents challenge drilling legislation

republicanherald.com/news/residents-challenge-drilling-legislation-1.1259054

BY ROBERT SWIFT (HARRISBURG BUREAU CHIEF)
Published: January 18, 2012

HARRISBURG – A local resident referred to Dallas Township’s experience with Marcellus industry facilities Tuesday as a key reason to oppose impact fee legislation that would make the state attorney  general referee in disputes over gas zoning ordinances.

“Taking local zoning controls from municipalities is not good for the citizens of Pennsylvania,” said Diane Dreier.

Dreier spoke at a Capitol rally where a coalition of groups called for defeat of impact fee legislation approved by both the Senate and House. Members of the Gas Drilling Awareness Coalition of Luzerne attended the rally held as lawmakers returned to session from a holiday recess.

The groups’ critique focused on provisions in both bills that they say provide for state preemption of local decision-making about drilling activities.

Both measures include provisions where a driller could ask the attorney general to determine whether a gas ordinance is reasonable or not. If a municipality persists in keeping an ordinance rejected by the attorney general, it would lose out on any impact fee revenue.

Faced with plans in recent years by gas companies to build compressor stations and other infrastructure within proximity to the Dallas school district campus, the township supervisors recently amended the zoning ordinance to balance the need for gas development with the rights of local residents and protection of property values, said Dreier.

This amendment allowed the township to put safety conditions on the siting of gas metering stations, said Dreier. The township’s ability to set these kinds of condition would end if the impact fee bills in their current form are enacted, she added.

The impact fee legislation would erode a system where land use and comprehensive plans are developed with grassroots participation, said Roberta Winters, vice president of the League of Women Voters of Pennsylvania.

“Land use should depend on those with first hand knowledge of the terrain not those in an office with satellite technology,” she added.

The attorney general will look out for the interests of municipalities under the gas ordinance review provisions, said Senate President Pro Tempore Joseph Scarnati, R-25, Jefferson County, who drafted the Senate-approved bill.

Many municipalities where drilling is taking place lack zoning ordinances because of concerns about enforcement costs and opposition of local residents, he added.

“Nobody should be more above reproach than the attorney general,” said Scarnati.

Scarnati is pushing for a three-way agreement among the House, Senate and Corbett administration on impact fee legislation before the governor’s state budget address Feb. 7. He said it will be more difficult to find a compromise once debate over the next state budget starts.

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A standalone Marcellus bill moving to passage

citizensvoice.com/news/drilling/a-standalone-marcellus-bill-moving-to-passage-1.1258401#axzz1jdK8S8y1

By Robert Swift (Staff Writer)
Published: January 17, 2012

HARRISBURG – Marcellus Shale well operators would be required to provide sophisticated siting information and develop an emergency response plan under legislation moving close to final passage this week.

Sen. Lisa Baker

The wellsite safety bill sponsored by Sen. Lisa Baker, R-Lehman Township, is one of a few bills addressing Marcellus drilling that’s moving separately from comprehensive impact fee legislation that  includes stronger regulation of drilling activities.

The measure requires operators to post signs at the wellsite bearing their GPS coordinates, give the coordinates to local, county and state emergency officials and develop response plans. The bill specifies this information is to be posted on reflective signs at both the access road entrance and well pad.

Baker, who chairs the Senate Veterans Affairs and Emergency Preparedness Committee, developed the bill to ensure that firefighters, ambulance crews and hazmat teams know where wells are being planned and where the access roads are.

“The changes will reduce the risk for workers, first responders and the community when things go wrong,” she said.

This safety measure has been approved by both the Senate and House once. A vote scheduled today in the Senate Rules Committee should move the bill to a final vote on the Senate floor so it can be sent to Gov. Tom Corbett for signing.

As lawmakers return from a holiday recess, three-way negotiations continue privately between the Corbett administration and Republican-controlled House and Senate over the impact fee bill.

Meanwhile, the House Finance Committee scheduled a vote Wednesday on a bill sponsored by Rep. Sandra Major, R-Montrose, to earmark 5 percent of the rents and royalties paid to the state Oil and Gas Lease Fund from drilling on most state-owned land to a small stream improvement program run by the state Department of Environmental Protection.

This program oversees projects to reduce flooding, prevent stream bank erosion and restore degraded stream channels, all factors cited by state and local emergency officials recently as contributing to the destructiveness of last fall’s flooding in the Susquehanna River Basin.

The Center for Rural Pennsylvania, a legislative research agency, will hold a session Thursday on efforts to clean streams of debris and sediment. The meeting is scheduled from 8:30 a.m. to noon at the Sullivan County Conservation District, Route 487, Dushore.

“The listening session will allow us to hear from local officials and residents impacted by the flooding so that we can work to improve and enhance state regulations for stream maintenance,” said Sen. Gene Yaw, R-Towanda, who chairs the center.

rswift@timesshamrock.com

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Senate GOP leader sees opportunity to resolve impact fee impasse

citizensvoice.com/news/drilling/senate-gop-leader-sees-opportunity-to-resolve-impact-fee-impasse-1.1252681#axzz1iadrIwtO
By Robert Swift (Harrisburg Bureau Chief)
Published: January 4, 2012

HARRISBURG – A top Senate Republican leader sees a window of opportunity this month to resolve outstanding differences over Marcellus Shale impact fee legislation before state budget and election issues get in the way.

Agreement on a combined impact fee and stronger environmental regulations for drilling activities is one of the unresolved issues carried over by state lawmakers and Gov. Tom Corbett from last year. Senate President Pro Tempore Joseph Scarnati, R-Jefferson County, said Tuesday he hopes final passage of impact fee legislation can be achieved before Corbett’s budget address early next month.

“People want it done,” he said. “If it isn’t done, it’s going to be an issue for 2012.”

With Pennsylvania continuing to face fiscal problems, Scarnati voiced concern that a continuing impasse over impact fees could threaten to delay passage of a state budget by the June 30 deadline as it briefly did last year.

Three-way negotiations between the Republican-controlled House and Senate and the governor have produced nearly complete agreement concerning such issues as protection of water supplies, Scarnati said. The sticking points remain the monetary size of the impact fee and whether it would be structured as a county optional fee provided for in a House-approved bill or the state-administered fee in a Senate-approved bill.

The senator voiced optimism that a fee proposal being discussed to give local municipalities some control over drilling activities yet allow for consistent application will break the impasse.

But he said the decision by five GOP senators from Southeastern Pennsylvania last month to vote for a floor amendment by Sen. John Yudichak, D-Nanticioke, for a higher $75,000 first-year impact fee shows the degree of support for using some fee revenue to meet statewide needs.

The Senate bill levies a $50,000 first-year fee; the House bill levies a $40,000 first-year fee.

The Senate will take a procedural vote to pave the way for a two-chamber conference committee when it reconvenes Jan. 17. The committee’s job is to hammer out a compromise to be presented to lawmakers on an up-or-down vote.

No decisions have been made on the Senate conferees, although Senate Minority Leader Jay Costa, D-Pittsburgh, indicated that Yudichak is the point man for his caucus on the issue.

House Speaker Sam Smith, R-Punxsutawney, said no decisions have been made on House conferees.

rswift@timesshamrock.com

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Gas impact fee bill wins in House

www.timesleader.com/news/Gas_impact_fee_bill_wins_in_House_11-18-2011.html
By Steve Mocarsky smocarsky@timesleader.com
November 18, 2011

Most area legislators oppose the measure as favoring drillers. Next stop is Senate.

HARRISBURG – The state House of Representatives on Thursday passed GOP-backed House Bill 1950, which imposes an impact fee on gas drillers.

The bill passed 107-76 and now moves to the Senate for consideration.

State Rep. Tarah Toohil, R-Butler Township, was the only legislator from Luzerne County to vote in favor of the bill, which would levy a $40,000-per-well fee in the first year of production that would decline $10,000 each year in the second through fourth years and remain at $10,000 through the 10th year. About 75 percent of the revenue would go to local governments, and 25 percent to statewide initiatives.

“This legislation is a fair compromise for the people of Pennsylvania and the natural gas industry,” Toohil said. “I believe it protects both our citizens and the environment and, at the same time, allows for continued job growth in an industry that holds such great economic promise for our state.”

State Rep. Karen Boback, R-Harveys Lake, said she prided herself “on voting with my constituents on this issue” when she cast a no vote. “Of the hundreds of comments I have received, not one person suggested I should vote for this legislation.”

Boback said the bill does not go far enough to protect the water and air, and “usurps the rights of local governments. While I did support amendments to increase local control in comparison to the original language, these revisions did not go far enough.”

Boback said the bill fails to address gas pipelines laid in non-drilling counties. Luzerne County, in which pipelines and compressor stations are planned, “deserves an opportunity to collect an impact fee and rectify any problems caused by the industry,” she said.

State Reps. Phyllis Mundy, D-Kingston, and Eddie Day Pashinski, D-Wilkes-Barre, respectively called the bill “an early Christmas present for big oil and gas” and “a bad bill for the taxpayers.”

Mundy said the bill “raises little revenue from corporations that are making huge profits from the Commonwealth’s natural resources, erodes local control over drillers and gives the secretary of the Department of Conservation and Natural Resources nearly unfettered power to take land for this industry” through eminent domain.

Pashinski said the bill’s effective maximum tax rate of 1 percent per well was “extremely low” compared to other natural gas producing states, such as Texas’ 5.5 percent and West Virginia’s 6 percent rates.

“Polls show the public overwhelmingly supports a fair tax on drillers, but this bill is nothing more than political cover for many Republicans,” he said.

The Senate on Tuesday separately passed a companion bill that removed more authority over drilling from local government. The two bills must now be reconciled.

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County gas drilling impact fee gets boost in committee vote

citizensvoice.com/news/drilling/county-gas-drilling-impact-fee-gets-boost-in-committee-vote-1.1227029#axzz1ceXFIjeS

By Robert Swift (Harrisburg Bureau Chief)
Published: November 3, 2011

HARRISBURG – Legislation that could provide for state preemption of local gas drilling ordinances won approval from a House committee Wednesday on a party-line vote.

The measure approved 15 to 10 by the Finance Committee would amend the 1984 Oil and Gas Act to supercede local drilling ordinances in areas where the state has an “appropriate” regulation, according to a committee bill summary.

The bill contains Gov. Tom Corbett’s plan to give counties with Marcellus wells the option of adopting an impact fee on drillers with 75 percent of the fee revenue going for local uses ranging from road repair to affordable housing and court budgets.

Local governments would have difficulty keeping wells away from residential areas and schools with the bill’s preemption provision, said Rep. Phyllis Mundy, D-Kingston, the ranking Democrat on the panel.

“The bill strips from local governments what little power they have to locate wells,” she added.

The sponsor, Rep. Brian Ellis, R-Lyndora, said the bill would set state standards for the nearly 50 percent of municipalities that don’t have gas ordinances.

The bill provides that each well pay an impact fee up to $40,000 the first year of operation, $30,000 the second year, $20,000 the third year and $10,000 in the fourth through 10th years.

It would implement a number of recommendations concerning environmental protection made last summer by the governor’s Marcellus Shale Advisory Commission.

The county impact fee approach has drawn support from the House Republican leadership as an alternative to other legislation calling for state collection of impact fee revenue and distribution to eligible counties. The GOP bill differs from the governor’s proposal with a plan to dedicate a portion of royalties from gas drilling on state-owned land for statewide environmental programs, said House Majority Leader Mike Turzai, R-Pittsburgh.

“This bill contains many of the provisions contained in our proposal, and I am pleased to see the Legislature working toward a final bill,” Corbett said.

On the committee, Reps. Mario Scavello, R-Mount Pocono, and Mike Peifer, R-Honesdale, voted for the bill. Mundy and Rep. Sid Michaels Kavulich, D-Taylor, voted against the bill.

Committee members debated and voted on the bill in a small committee room jammed to overflow with dozens of observers.

Mundy said the impact fee would be the equivalent of a one percent tax – a rate very low compared to other drilling states. The bill would generate no revenue for Luzerne County despite the impact of compressor stations and pipelines planned for there, she added.

The bill wouldn’t generate enough revenue to meet local impact needs, Kavulich said.

Ellis touted it as a job-creation measure.

The Senate has postponed action on impact fee legislation being developed by both caucuses until the chamber returns Nov. 14 following an election recess.

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