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Pennsylvania Lawmakers Go into Overtime on Impact Fee, Local Control

On the final evening of debate before state lawmakers recessed for the year, critics of a impact fee in Pennsylvania fought to increase the amount of revenue raised by the proposal.

As NGI's Shale Daily went to press, Senate Democrats were pushing an amendment to House Bill 1950 that would significantly increase the fee imposed on unconventional wells in the state, remove controversial language restricting the ability of local governments to regulate development and make slight changes to increase the proposed setback at well sites.

The amendment appeared to fail on the Senate floor with a tie vote of 25 to 25, but proponents heatedly demanded a reconsideration, claiming that Senate leadership shut the vote down abruptly while one senator in the process of changing his vote to support the amendment.

That effort failed. But Senate Democrats continued to debate what happened, but said they would continue to propose a series of additional amendments to HB 1950. Senate Democratic Leader Jay Costa of Pittsburgh said his caucus hoped that the bill would be changed enough to require that it be returned to a conference committee where the details could once again be debated.

Sen. John Yudichak, a Democrat from northeastern Pennsylvania, originally introduced the amendment during a Senate Appropriations Committee on Tuesday. With three Republicans breaking ranks to vote for the amendment, the proposal split the Senate Appropriations Committee in half. While that didn't give the amendment enough votes to pass, it showed the "deep concerns legislators of both parties share" over the bill, according to Yudichak.

"This amendment, championed by my Senate Democratic colleagues, was a better option," he said after the committee reported out the bill, unchanged, by a party-line vote of 17 to nine. "Not only would it have provided a fair and responsible impact fee, but it also would have strengthened environmental protections and preserved local governments' authority to regulate development."

The amendment proposed a $75,000 per well fee that would have increased each year and then eventually dropped to $10,000 after the 14th year of production. The original bill contains a $50,000 fee that decreases over the first 20 years of production. Both fees would cover all unconventional wells, such as those in the Marcellus and Utica shales (see Shale Daily, Dec. 13).

With the bill now ready for its third consideration, the Senate could either quickly pass the legislation and send it back to the House, or debate it extensively into the night.

Some major sticking points remain unresolved. The original HB 1950, for instance, contained a $40,000 fee per unconventional well that decreased over 10 years.

According to a fiscal note, the Senate version would retroactively raise $94 million for 2011 and more than $154 million in 2012. Even though the fee decreases, the revenue it generates is expected to rise for several years as companies continue to drill new wells.

The proposals differ in other crucial ways. While the Senate wants the fee to be statewide, the House would give the authority to counties. The House measure would keep 75% of the revenue at the local level, while the Senate version would send only 55% to counties and municipalities, using the rest for statewide environment programs.

The issue of local control is increasingly contentious.

More than 100 people turned out at a town hall meeting in the Pittsburgh suburb of Greentree on Tuesday night to protest the local zoning restrictions in the bills. And in a widely published editorial, the head of the Pennsylvania State Association of Township Supervisors said that despite recent amendments to make those restrictions "more reasonable," the local government group still could not endorse the legislation as written.

Additionally, a new survey from Muhlenberg College and The Morning Call of Allentown, PA, not only found the typical broad support for an impact fee, but also found that 59% of respondents favored local control of development over state control.

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