Frackers Fund University Research That Proves Their Case

Pennsylvania remains the largest U.S. state without a tax on natural gas production, thanks in part to a study released under the banner of the Pennsylvania State University.

The 2009 report predicted drillers would shun Pennsylvania if new taxes were imposed, and lawmakers cited it the following year when they rejected a 5 percent tax proposed by then- Governor Ed Rendell.

“As an advocacy tool, it worked,” Michael Wood, research director with the non-profit Pennsylvania Budget and Policy Center in Harrisburg, Pennsylvania, said in an interview. “If people wanted to find a reason to vote against having the industry taxed in that way, that gave them reason to do it.”

What the study didn’t do was note that it was sponsored by gas drillers and led by an economist, now at the University of Wyoming, with a history of producing industry-friendly research on economic and energy issues. The researcher, Tim Considine, said his analysis was sound and not biased by industry funding.

As the U.S. enjoys a natural-gas boom from a process called hydraulic fracturing, or fracking, producers are taking a page from the tobacco industry playbook: funding research at established universities that arrives at conclusions that counter concerns raised by critics.
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DCNR to collect money from drillers who harvest gas under public streams

By Laura Legere (Staff Writer
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.

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

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 and the blog is located at .

SOURCE: Citizens for Pennsylvania’s Future

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

Pa. GOP to seek vote on drill bill

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.

Drilling fee legislation near?

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.

Residents challenge drilling legislation

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.

A standalone Marcellus bill moving to passage

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.

Senate GOP leader sees opportunity to resolve impact fee impasse
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.

Revised data good case for severance tax
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.

Corbett unveils shale proposal
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.