Shale Daily / NGI All News Access

Corbett Remains Opposed to Severance Tax; Might Consider Impact Fees

With the first meeting of his recently formed Marcellus Shale Advisory Commission set for Friday, Pennsylvania Gov. Tom Corbett remains firmly opposed to a state-imposed severance tax on the natural gas industry, but is open to the idea of local impact fees. And those fees can't be considered until the local impact of drilling is quantified, a Corbett spokesman told NGI's Shale Daily Thursday.

"A lot of it is speculatory at this point. It is in the discussion phase. We haven't seen any proposals as far as fees," the spokesman said. "A severance tax or a statewide tax? The governor is definitely opposed to that. But if there were any proposals coming out of the advisory commission or otherwise for a local-based fee to mitigate local impacts, it would be reviewed."

Corbett on Wednesday told reporters that revenue derived from any impact fee would have to go to local communities, rather than the state's general fund, as a prerequisite to receiving his support.

Corbett earlier this month announced the formation of the Marcellus Shale Advisory Commission, led by Lt. Gov. Jim Cawley, "to oversee how we can build around this new industry and how we can make certain we do this while protecting our lands, our drinking water, our air and our communities, all while growing our workforce" (see Shale Daily, March 9). Corbett invited 29 people from government, industry, academia and environmental advocacy to be on the commission, which is tasked with issuing a report within four months of its first meeting.

Until the commission and localities define any local impacts of natural gas drilling in the Marcellus, talk of impact fees is "speculation," the spokesman said.

"There needs to be an open discussion...the discussion needs to be 'what are the local impacts?' and that needs to be considered at the local level."

Last year Pennsylvania's Democratic-controlled House overrode more moderate Republican proposals and passed a tax bill that included a 39 cents/Mcf tax rate (about 10%) with 60% of the revenue directed to environmental projects and municipal governments dealing with the impact of gas drilling, and 40% going into general revenue (see Shale Daily, Oct. 5, 2010). Despite commitments during last year's budget negotiations to pass a severance tax on gas drillers, Pennsylvania Senate lawmakers balked on the issue during a lame duck session (see Shale Daily, Nov. 18, 2010).

Republicans now hold majorities in both the Pennsylvania House and Senate and Corbett, who is also a Republican, vowed "no new taxes" -- including a severance tax on natural gas -- during his campaign last year (see Shale Daily, Oct. 28, 2010). As promised, Corbett did not include a severance tax on Marcellus Shale production in his first budget.

A majority of Pennsylvania residents support the use of a severance tax on drilling operations to help close a projected $4 billion state budget gap, according to the results of recent surveys (see Shale Daily, March 18; Jan. 18; Dec. 28, 2010).

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