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Industry Seeks Balance on Pennsylvania Impact Fee, Regulations

As Pennsylvania legislators continue to work out a compromise on natural gas drilling impact fee legislation, the Marcellus Shale Coalition (MSC) on Friday urged leaders in Harrisburg "to avoid the temptation of crafting policy in a vacuum and instead design a fee and regulatory structure that not only provides heightened safeguards to the public, but also a competitive investment climate."

MSC President Kathryn Klaber on Friday highlighted the benefits the Marcellus Shale has brought for Pennsylvanians. "In one year alone, the industry has provided $1.6 billion in royalties and bonus fee income to local landowners," she said. "Residents now enjoy lower energy bills, with one conservative estimate showing consumers saving a total of nearly $650 million in 2011."

She added that besides investing more than $400 million in roads and related infrastructure, the industry also has paid an estimated $1 billion in state and local taxes during the last five years. The natural gas industry also supports nearly 230,000 jobs throughout the commonwealth, according to state labor data.

The state Senate and House of Representatives approved competing impact fee proposals in November 2011, but couldn't a reach a compromise between the different bills (see Shale Daily, Nov. 18, 2011). The Senate eventually moved HB 1950 in mid-December -- on its final day in session for the year -- by replacing the original language with its own. The House voted those changes down on its final day before the winter recess (see Shale Daily, Dec. 21, 2011).

The state Senate is expected to vote soon to send HB 1950 to a conference committee, where members of both chambers and both parties will try to come to a compromise. The six-member committee would include three senators and three representatives, with two members of each chamber coming from the majority (Republican in both houses) party and one each from the minority. Despite the work, there has been a growing chorus for legislators to scrap the bill. A coalition of environmental groups is calling on Pennsylvania lawmakers to take a new approach in their ongoing efforts to approve an impact fee on natural gas drilling in the state, either by starting the process over or dividing the omnibus legislation into four separate bills (see Shale Daily, Jan. 19). PennFuture previously called for the General Assembly to "junk the whole thing and start over again."

Klaber said it is important to realize that contributions from the Marcellus Shale to Pennsylvania's economy and workforce hinge on "a rational regulatory environment," noting that the ability to create jobs and invest in local communities going forward will depend "in no small part on the type of regulatory environment our elected leaders choose to create."

Klaber reiterated that the MSC supports an impact fee, but only if it is structured in a competitive manner. "The natural gas industry -- like any other industry -- cannot grow amid continually increasing costs, nor can it make the proper long-term investments in new infrastructure, new jobs and new equipment if that money instead must be used to pay new taxes or higher fees," she said. "Creating an overly burdensome tax or fee -- especially given market conditions and the historically low price of natural gas -- could drive investment out of Pennsylvania and into more competitive states, regions or even nations, resulting in less state and local revenue, lost jobs and fewer public investments."

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