Gas industry must learn Pennsylvania not for sale
http://tribune-democrat.com/editorials/x1511088498/Gas-industry-must-learn-Pennsylvania-not-for-sale
Edward Smith-Editorial June 29, 2011
Gov. Tom Corbett accepted more than $1 million from the gas industry, got elected, appointed a gas driller to head his transition team, appointed his man to run the Department of Environmental Protection (and regulate the gas industry), and has steadfastly refused to tax the gas industry even though Pennsylvania is the only state without a severance tax.
Drilling for natural gas in the Marcellus Shale is a historic, one-time opportunity to produce a big enough source of new revenue for the state to solve some real problems and reduce the growing property tax burden on homeowners and businesses.
The biggest problem facing the state is the miserable quality of public education.
Former Gov. Tom Ridge said his biggest regret was his inability to improve public education.
Pennsylvania has the opportunity to enact a tax on the still-emerging gas drilling industry and earmark the revenue for education and environmental protection.
Earmarking this new revenue to fund education would reduce state spending and go far to balance current and future state budgets. Property taxes should be rolled back to a base year and further increases prohibited.
Pennsylvania’s Environmental Bill of Rights makes its citizens (not the gas companies) beneficiaries and the governor and Legislature trustees.
As a trustee, the governor has a fiduciary responsibility to protect the beneficiaries, not to favor the gas industry.
Legislators have the same responsibility. It’s time they act like trustees.
Corbett has chosen, instead, to make deep cuts in the funding of all public education and avoid taxing the gas industry. The result is likely to be further slippage in the quality of education, higher costs for higher education (already unaffordable for many) and higher property taxes.
An impact fee is not the same as a severance tax, but there should be impact fees on every gas well and there should be an environmental impact statement tied to regulation because the geology on every well is different.
The revenue from impact fees should go to local governments to offset the costs of infrastructure and services.
The revenue from the severance tax should go to the state (but not into the General Fund) and be earmarked for education and environmental protection.
Ridge, now a consultant to the natural gas industry, says that drillers need to improve their image. He might have said that the industry needs to clean up its act and its image.
The oil and gas industry is the only one in America allowed to inject – unchecked – known hazardous, rock-dissolving chemicals into the earth, thus risking contamination of drinking water.
The “Halliburton Loophole” is the name given to the exemption in the Clean Drinking Water Act that exempts the industry from federal regulation.
Halliburton patented the toxic cocktail of chemicals used in the hydraulic fracturing technique to extract natural gas.
John Hanger, former secretary of the state Department of Environmental Protection, said that frak fluid is “one of the most hazardous materials on earth.”
The New York Times says, “If hydraulic fracturing is as safe as the industry says it is, why should it fear regulation?”
Governmental regulation is all that stands between environmental destruction and an industry that has shown a total disregard for the environment (dumping frak waste into rivers and streams is one example).
As The New York Times pointed out in a series of investigative reports, Pennsylvania was unprepared and ill-equipped to deal with the Marcellus Shale gas drilling dilemma.
When the gas industry gives millions of dollars to candidates, they expect favors in return. They are trying to buy Pennsylvania.
Recently, the industry tried to stack a public hearing held by the U.S. Department of Energy by offering all-expense-paid trips to pro-drilling landowners in northeast Pennsylvania to attend and testify at a public hearing held in Washington, Pa.
Citizens with poisoned wells and those who care about poisoned streams and water tables had to pay their own way.
The gas industry has funded university studies and opinion polls to mold public opinion.
When the gas industry invites regulation, behaves ethically, does not try to buy votes and favors from public officials, avoids half-truths and untruths, accepts responsibility for disasters and protects the environment, it will deserve respect.
Money talks, as it did 100 years ago when mining companies polluted our streams.
But I believe that most Pennsylvanians agree that our state is not for sale.
Edward Smith of Jackson Township is a retired city and county manager.
Drilling areas cause for concern
http://www.timesleader.com/news/Drilling_areas_cause_for_concern_06-17-2011.html
Posted: June 18, 2011
Health matters Pa. wants to create registry to track illnesses in fracking communities
HARRISBURG — Gov. Tom Corbett’s top health adviser said Friday that he wants to make Pennsylvania the first state to create a registry to track illnesses in communities near heavy drilling in the Marcellus Shale natural gas formation to determine what kind of impact, if any, the activity has on public health.
Health Secretary Eli Avila told Corbett’s Marcellus Shale Advisory Commission that creating such a registry is the timeliest and most important step the Department of Health could take, and that his agency is not aware of anything like it in other drilling states.
“We’re really at the frontiers of this and we can make a speedy example for all the other states,” Avila told the commission at its fourth meeting.
Collecting information on drilling-related health complaints, investigating them, centralizing the information in one database and then comparing illnesses in drilling communities with non-drilling communities could help refute or verify claims that drilling has an impact on public health, he said. The aggregation of data and information also would allow the Department of Health to make its findings public, in contrast to the privacy that surrounds its investigation into individual health complaints and the findings that may result.
The Marcellus Shale formation, considered the nation’s largest-known natural gas reservoir, lies primarily beneath Pennsylvania, New York, West Virginia and Ohio. Pennsylvania is the center of activity, with more than 3,000 wells drilled in the past three years and thousands more planned in the coming years as thick shale emerges as an affordable, plentiful and profitable source of natural gas.
The rapid growth of deep shale drilling and its involvement of high-volume hydraulic fracturing, chemicals and often-toxic wastewater are spurring concerns in Pennsylvania about poisoned air and water.
“As drilling increases, I anticipate, at least in the short term, a proportionate increase in concerns and complaints which the department must be prepared to address,” he said.
In the past year or so, the Department of Health has received several dozen or so health complaints, he said.
One woman, Crystal Stroud of Granville Summit in northern Pennsylvania, told an anti-drilling rally in the Capitol this month that she is hearing from others in Bradford County about bizarre and sudden health problems that they blame on contaminated water from the area’s heavy drilling.
Stroud herself blames her barium poisoning on well water polluted by drilling near her home, and accused state agencies of turning a blind eye.
“I am extremely confused as to why our Health Department is not interested in these issues and no one from (the) Pennsylvania Health Department has contacted us, and why are they not investigating this?” Stroud, 29, told the crowd on June 7.
“Every week I receive a phone call from someone different in my county that has unexplained rashes, high blood pressure, heart palpitations, high barium levels, a child with blisters all over his face from his mother bathing him in the water, and even a woman whose spleen burst in an unexplained way, all with contaminated water,” she said.
A spokesman for Corbett has said both the departments of Health and Environmental Protection have active investigations into Stroud’s claims, and the company that drilled the well, Dallas-based Chief Oil & Gas LLC, has denied responsibility for Stroud’s health problems.
On Friday, Avila said his agency has found no links between drilling and the illnesses and diseases presented to it so far, but he added that a wider study is necessary to determine whether there are any associations, and a health registry could accomplish that.
Such health registries are common, and in the past have been created to monitor and study data related to cancer and rare diseases, health department officials said. To set up a drilling-related registry and fully investigate drilling-related health complaints would require another $2 million a year for the department and possibly require the help of the state’s schools of public health, Avila said.
Shale drilling requires blending huge volumes of water with chemical additives and injecting it under high pressure into the ground to help shatter the thick rock — a process called hydraulic fracturing. Some of that water returns to the surface, in addition to the gas, as brine potentially tainted with metals like barium and strontium and trace radioactivity by the drilling companies.
DEP suggests stronger drilling rules are needed
http://online.wsj.com/article/APda6b059295ad44818b60955e3e981cef.html
HARRISBURG, Pa. — Gov. Tom Corbett’s administration is recommending tougher laws to protect drinking water from pollution caused by booming natural gas exploration in Pennsylvania and to allow the state to wield harsher penalties against drilling companies that violate the law.
Department of Environmental Protection Secretary Michael Krancer made the recommendations in a letter sent Friday to Lt. Gov. Jim Cawley, who chairs the governor’s Marcellus Shale Advisory Commission.
One recommendation would restrict well drilling within 1,000 feet of a public water supply. Currently, the law requires as little as 100 feet in many cases. Another would clarify the DEP’s authority to revoke or refuse to issue a drilling permit under certain conditions, and allow it to require comprehensive tracking of drilling wastewater that would help the agency more accurately determine wastewater recycling rates.
Krancer also recommended expanding buffer requirements between gas wells and private drinking water wells from 200 feet to 500 feet; boosting per-day penalties for violating the law and well-plugging insurance requirements; and extending a driller’s presumptive liability for pollution or water loss from 1,000 feet to 2,500 feet from a gas well.
Many of those recommendations, if not all, have been under consideration in the Legislature since last year, with little action. Some of the bills would provide for stronger protections than the Corbett administration advocates.
The Marcellus Shale formation, which is considered the nation’s largest-known natural gas reservoir, lies primarily beneath Pennsylvania, New York, West Virginia and Ohio. Pennsylvania is the center of activity, with more than 3,000 wells drilled in the past three years and thousands more planned in the coming years as thick shale emerges as an affordable, plentiful and profitable source of natural gas.
When drilling companies began flocking to Pennsylvania several years ago to exploit the Marcellus Shale formation, they were largely working under laws from the 1980s that never envisioned deep-drilling activity that is combined with high-volume hydraulic fracturing, or fracking, and the recent innovation of horizontal drilling underground.
So far, the Legislature has done little to change that, other than pass a bill to require faster public disclosure of well-by-well gas production data from Marcellus Shale wells and debate the merits of a tax on gas extraction.
Pennsylvania remains the largest gas-drilling state without such a tax and Corbett opposes the imposition of one.
For decades, energy companies have drilled shallow oil and gas wells in Pennsylvania. But high-volume fracking involves the use of chemicals and produces millions of gallons of often-toxic wastewater, sparking fresh environmental concerns about the protection of public waterways and wells that provide drinking water to millions of people.
Last year, the Department of Environmental Protection won approval of tougher regulations on drilling safety, chemical disclosure and wastewater disposal and, before that, regulatory approval to increase permit fees so that it could pay the salaries of more inspectors and permitting staff.
But Pennsylvania has left a number of protections undone, some lawmakers say.
For instance, Pennsylvania’s $1,000 per day penalty on drillers for violating state regulations lag many other states. The $25,000 per-company insurance bond that the state requires to plug abandoned wells is out of date, as well, since plugging a single well can cost as much as $100,000.
In April, the DEP asked drilling companies to voluntarily stop taking the wastewater to riverside treatment plants that were ill-equipped to remove all the pollutants from it. The agency has not said whether the companies are complying with the May 19 deadline.
___
Information from: The Times-Tribune, http://thetimes-tribune.com/
Marcellus panel turning focus to local impacts
http://citizensvoice.com/news/drilling/marcellus-panel-turning-focus-to-local-impacts-1.1149959#axzz1MzQ9BcoU
By Robert Swift (Harrisburg Bureau Chief)
Published: May 21, 2011
HARRISBURG – At the halfway point of its work, a state commission looking at development of the Marcellus Shale gas reserves will shift more of its focus to the impact of drilling operations on local communities, Lt. Gov. Jim Cawley said Friday.
Cawley, the chairman of the Marcellus Shale Advisory Commission, said the members will hear presentations from local government officials at its next meeting on June 17.
The introduction of a local impact fee bill this week by Senate Republican leader Joseph Scarnati, R-Jefferson County, is focusing attention on where that issue stands on the commission’s agenda.
Gov. Tom Corbett has said he wants to hear what the commission has to say about impact fees before taking a position. Cawley said the commission intends to stick to its six-month timetable of making comprehensive recommendations concerning Marcellus issues to Corbett by July 22.
“We are looking at impact fees as a possible recommendation to the governor,” Cawley said. “If this commission determines there are unmet impacts that need resources, we will recommend that.”
Cawley reiterated that the commission won’t be recommending a state severance tax on natural gas production since Corbett strongly opposes one. Scarnati’s impact fee bill would levy a base $10 fee annually on each Marcellus well. The base fee would be adjusted for increases in the volume of natural gas produced and price of gas on the market.
Under Scarnati’s bill, up to 60 percent of the fee revenue would go to municipalities and counties with producing wells. The remaining 40 percent would go to environmental and infrastructure projects overseen by the Commonwealth Financing Authority and to county conservation districts.
rswift@timesshamrock.com
Group: Corbett should heed drilling study
http://www.timesleader.com/news/Group__Corbett_should_heed_drilling_study_05-09-2011.html
Posted: May 10, 2011
STEVE MOCARSKY smocarsky@timesleader.com
The head of a local group that supports more restrictions on natural gas drilling says a scientific report released on Monday substantiates group members’ concerns and should be evidence enough for Gov. Tom Corbett to impose a moratorium on drilling in Pennsylvania.
Dr. Tom Jiunta, president and founder of the Luzerne County-based Gas Drilling Awareness Coalition, said a report by a team of Duke University scientists that is to be published in the Proceedings of the National Academy of Science, “documented pathways from where they frack to drinking water supplies.”
Hydraulic fracturing, or fracking, is the injection of water, sand and a low concentration of chemicals into a shale formation a couple thousand feet underground at high pressure to stimulate the release of natural gas from the formation. A perforation gun lowered into the well casing detonates charges that create initial fractures in the shale.
Jiunta said a Cornell University scientist, Anthony Ingraffea, showed his group slides indicating that scientists believe the fractures are “unpredictable.”
“If pathways exist for methane, then it also exists for the toxic heavy metals found underground along with the brine solutions that are hazardous and the fracking chemicals,” Jiunta said. “It’s common sense.”
“Gov. Corbett said last week he would rely on science, not emotion” for making decisions related to natural gas exploration. “There’s plenty of science out there now, and I think this proves it,” Jiunta said.
In a prepared statement, Kathryn Klaber, president of the Marcellus Shale Coalition, said Pennsylvania has “an extensive and well-documented history of naturally occurring methane impacting private water wells, long before Marcellus development began just a few years ago.”
She called the report “at best inconclusive. Further, the fact that is was prepared, in part, by a vocal and outspoken natural gas production critic raises a host of questions regarding academic veracity.”
Travis Windle, spokesman for the coalition, pointed to a New York Times article that quoted John Conrad, a New York hydrogeologist “closely affiliated with the drilling industry,” who said the researchers may have “jumped the gun” by relying on only post-drilling data without testing water wells before drilling occurred in the area.
Windle also noted that Conrad told The New York Times that the thermogenic methane found in the water wells, which many scientists say comes from the same deep gas layers where drilling occurs, could be naturally occurring.
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.
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.
Pennsylvania’s governor outlines what he won’t let companies drilling for gas do.
http://www.timesleader.com/news/Corbett__No_forced_pooling_04-27-2011.html
Posted: April 27, 2011
Corbett: No forced pooling
MARC LEVY
PITTSBURGH — Gov. Tom Corbett told a crowd from the region’s booming natural gas industry Tuesday that Pennsylvania needs its help to climb out of the recession, but he also warned that he would aggressively enforce environmental laws and that he opposes a controversial change in law sought by drilling companies.
“Forced pooling” is tantamount to private eminent domain, and he doesn’t agree with it, Corbett told the seminar crowd in suburban Pittsburgh, which is a fast becoming a hub for multinational energy companies exploring the Marcellus and Utica shales beneath Pennsylvania, Ohio and West Virginia.
“I’m sure there’s many here, many here that would like to see” forced pooling for Marcellus Shale gas, he said. And then he told what he called “maybe a dirty little secret” about companies that say they would be willing to pay a severance tax that is the subject of much debate in the state Legislature.
“They never add the caveat that I know that many of the companies that have gone to Harrisburg have said, ’Yeah, we’ll take the tax if we get certain things in regulation, including the forced pooling,’” Corbett said.
Forced pooling is on the books in some other states and can be used to force holdout landowners to lease their below-ground gas rights under certain conditions. The issue, at the top of the industry’s wish list since at least last year, has gained little traction in the Legislature. Companies say it would help limit the number of roads and wells built to extract gas.
Corbett also opposes a severance tax on gas extracted from the Marcellus Shale, the nation’s largest-known gas reservoir.
On Tuesday, he reiterated his stance against it, and tried to underscore the urgency of competing for the industry’s money and equipment. The Marcellus Shale beneath Pennsylvania is one of six natural gas deposits vying to offer the best return on investment for energy companies, he said.
“I need, we need, Pennsylvania needs the jobs today to get out of this recession,” he said.
Pennsylvania is the nation’s largest natural-gas producing state that does not tax the activity.
Corbett, who said the media would call Tuesday’s crowd of several hundred a “friendly audience,” accepted nearly $1 million in donations to his gubernatorial campaign from people in the natural gas industry.
However, he closed his 35-minute speech by promising to vigorously enforce environmental laws and saying he will use his power to grant drilling permits to punish companies, if necessary.
“I know how to get the attention of your CEOs, whether they be here in Pennsylvania or in Oklahoma or in Texas or in Louisiana, and that’s through the permit,” Corbett said.
He spoke a week after he asked natural gas drillers to stop one of their most troubling environmental practices: taking polluted wastewater from gas wells to riverside treatment plants that aren’t equipped to remove all the contaminants.
The audience heard numerous warnings about losing the public relations battle over the industry’s environmental record and the possibility of stronger regulations, both on the federal level and in states from Texas to West Virginia.
Drawing gas from shale deep underground is being touted by the industry as a major new source of cheap, homegrown energy, thanks to the recent combination high-volume hydraulic fracturing and the new technique of horizontal drilling. Nearly 3,000 wells have been drilled in Pennsylvania’s Marcellus Shale.
However, hydraulic fracturing, or fracking, has sparked concern from some environmental groups and public officials, particularly as people in drilling communities in Texas, Pennsylvania and elsewhere come forward with tales of contaminated air and well water. It also has drawn scrutiny from the U.S. Environmental Protection Agency.
Drillers escape taxes, group says
http://standardspeaker.com/news/drillers-escape-taxes-group-says-1.1137967
By robert swift (Harrisburg Bureau Chief)
Published: April 27, 2011
HARRISBURG – The vast majority of natural gas drillers in Pennsylvania don’t pay the state corporate income tax and benefit from federal tax incentives and state tax breaks, according to a report issued Tuesday by a Harrisburg think tank.
The report by the Pennsylvania Budget and Policy Center is more fodder for the statehouse debate over whether the companies that produce natural gas in the Marcellus Shale boom should be subject to a special state tax or local impact fee levied by municipalities. Gov. Tom Corbett has steadfastly opposed a severance tax saying it will drive investment to other states. Republican senators plan to outline an alternate local impact fee proposal later this week.
The budget and policy center is a Harrisburg-based think tank that advocates tapping new state revenue sources, including a severance tax, to address Pennsylvania’s fiscal problems.
Most gas drillers structure their business as partnerships so they can instead pay the much lower state personal income tax, the report said. The state corporate income tax rate is 9.99 percent, while the state personal income tax rate is 3.07 percent.
A number also take advantage of the so-called Delaware loophole that allows businesses headquartered in other states to avoid paying the corporate income tax on their operations here, according to the report.
The federal incentives, such as allowing write-offs for a large portion of drilling and well-completion costs, make substantial dents in a driller’s taxable income, the report said.
rswift@timesshamrock.com
Corbett opposes ‘forced pooling’ of natural gas
Governor speaks at industry seminar as Senate leader gets ready to introduce impact fee bill.
http://www.mcall.com/news/local/mc-pa-senate-impact-fee-20110426,0,6499620.story
Gov. Tom Corbett said he is opposed to “forced pooling,” which would give the Marcellus Shale gas well industry the right to drill under and take gas from a property owner that has not signed a lease.
The pooling of gas drilling rights, which is at or near the top of the industry’s wish list, amounts to the use of eminent domain for private interests, the governor said.
The comments on forced pooling were made at the K&L Gates fourth annual Appalachian Basin Oil and Gas Seminar in Green Tree, Allegheny County, an event that drew about 400 people, many from industry and law firms.
“Private eminent domain, I don’t think that’s right,” Corbett said. “I was made aware that it’s on the industry’s wish list, but I don’t agree. If I see a bill that contains forced pooling, I won’t sign it.”
Corbett also repeated his opposition to a severance tax on Marcellus gas extraction.
His speech comes a day after workers were able to replace a damaged wellhead on a Bradford County gas well following last week’s blowout and wastewater spill.
Officials from Chesapeake Energy, who operate the Leroy Township drilling site, announced the completed repairs Monday night. The malfunctioning wellhead was part of the cause of last week’s accident, according to Chesapeake.
While briny wastewater spilled into a nearby creek tributary during the early hours of the incident, both the company and state Department of Environmental Protection have reported no significant impacts so far. DEP officials said Monday they did not have results yet from last week’s water sampling, and were doing additional testing this week.
As investigations by DEP and U.S. Environmental Protection Agency officials get under way, Chesapeake said its employees will continue to work with regulators on determining the cause of the equipment failure.
Neither state nor federal environmental regulators have indicated what potential penalties could be imposed on the company, but both are seeking information on what happened and the chemicals in the water that was released.
Meanwhile, the top Republican in the state Senate says he’ll unveil the “broad parameters” of a local impact fee on natural gas drillers on Thursday — the day after the Corbett administration’s own shale study panel meets to likely discuss the issue.
Senate President Pro Tempore Joe Scarnati, R-Jefferson, said he’ll hold a 9:30 a.m. conference call Thursday to outline the fee, which would be used to help municipal and county governments deal with the public cost of drilling.
In a brief interview, Scarnati, whose northwestern Pennsylvania district sits in the heart of shale drilling territory, said he’d only offer general details about his proposal, but would not be presenting formal, legislative language.
“It’s not a bill,” he said. “It’s a proposal for feedback.”
Scarnati’s chief of staff, Drew Crompton, said his boss would not be speaking for his caucus Thursday. A more formal proposal on behalf of Senate Republicans would come later.
“We’ve tried to incorporate everyone’s concerns,” Crompton said.
On Monday, Corbett said he’d be willing to look at whatever proposal lawmakers send him. In the past, the Republican has been adamant that none of the money raised from the fee go into the state’s general fund budget.
Jan Jarrett of the environmental group PennFuture said she’s sticking by her preference for a severance tax on drillers, arguing that the impacts from drilling reach far beyond the drilling area.
Jarrett said she favors a severance tax proposal put forth by Rep. Greg Vitali, D-Delaware, that would split the tax money three ways among local governments, the general fund budget and the Growing Greener environmental program.
Jarrett said she wants to “make sure all Pennsylvanians benefit from drilling.”
Such a scenario seems unlikely. Corbett has said he will not sign a severance tax bill.
Morning Call Harrisburg Reporter John L. Micek and Don Hopey and Laura Olson of the Pittsburgh Post-Gazette contributed to this story.