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Pennsylvania Governor Bars Drilling on State Forest Land

In a move that could be seen as retribution for state Senate Republicans' negotiating tactics and opposition to a proposed natural gas severance tax, Pennsylvania Gov. Ed Rendell Tuesday signed an executive order placing an immediate ban on leases for oil and gas development on any land owned and managed by the state's Department of Conservation and Natural Resources (DCNR).

"Failing to protect these acres will significantly alter the ecological integrity and the wild character of our state forest system," Rendell said. "That would devastate our ecotourism industry and jeopardize the green certification upon which the state's forest products industry depends."

Rendell's decision is significant because acreage left for leasing in the state is dwindling. The moratorium, which bans leases requiring new surface disturbances, was put in place to protect the "pristine nature" of publicly owned forests, a Rendell spokesman said.

Approximately 700,000 acres of Pennsylvania's 2.2 million-acre state forests are currently available for natural gas extraction, Rendell said. When completely developed over the next 30 years, those leased lands would include about 1,000 well pads and as many as 10,000 wells.

Approximately 1.5 million acres of Pennsylvania state forest land sits atop the Marcellus Shale. In August DCNR said there was no unleased state forest acreage suitable for natural gas development remaining in the Marcellus Shale area (see Daily GPI, Aug. 16).

Rendell said the executive order was necessary because the Pennsylvania Senate failed to pass legislation that would have instituted a moratorium on state forest land leases (see Daily GPI, May 7).

"Drilling companies' rush to grab private lands across the state has left few areas untouched by this widespread industrial activity," Rendell said. "We need to protect our unleased public lands from this rush because they are the most significant tracts of undisturbed forest remaining in the state."

The moratorium was necessary because the impact of the "increase in the acreage of state forest and state park land that will be used for gas development as a result of activity in the Marcellus Shale formation cannot be fully understood or predicted at this early stage of development," according to the executive order. Gas development in the Marcellus "will significantly increase openings in large blocks of currently contiguous forest canopies," while "changes to surface and groundwater hydrology resulting from the increased drilling activity and the fracturing process required to develop gas in the Marcellus Shale formation will need to be carefully monitored as drilling progresses to evaluate potential impacts."

"We simply cannot risk subjecting these sensitive and high-value tracts to the same kind of environmental accidents and mishaps that have happened on private lands elsewhere in the state because of the drilling industry's poor practices," Rendell said.

"Nearly half of the state forestland overlaying the Marcellus Shale formation is already leased; more leases would fragment the habitat and destroy the very essence of the forests, along with our valuable outdoor tourism industry that attract hunters and anglers from across the nation," said Jan Jarrett, CEO of the environmentalist group Citizens for Pennsylvania's Future. The state's Senate should take Rendell's lead and return to Harrisburg to pass "a robust severance tax on drilling," Jarrett said.

Rendell's announcement came in the wake of failed negotiations over the severance tax and one week before an election that could change the face of the state's General Assembly. Rendell, a Democrat, has said Pennsylvania's Republican-dominated Senate hasn't negotiated a severance tax on natural gas drilling "in good faith."

The House passed legislation (SB 1155) last month that included a 39 cents/Mcf tax rate (see Shale Daily, Oct. 5), but Senate Republicans said that rate was too high. Some Republicans called for a 1.5% tax for a well's first three years and then increasing that to 5%. Rendell, who had previously proposed a tax rate that would levy a 5% tax on the gross value of gas extracted plus 4.7 cents/Mcf, recently voiced his support for a compromise plan that would implement a 3% tax rate in fiscal year 2010-2011, a 4% tax rate the following year and 5% thereafter. Democrats agreed to consider the proposal, but Senate Republicans stuck to their 1.5-5% proposal.

While Rendell has said the tax "clearly is dead" this year (see Shale Daily, Oct. 22), a group of Republican senators from southeastern Pennsylvania have asked Senate President Joe Scarnati (R-Jefferson) to continue working on the legislation, the Associated Press (AP) reported on Tuesday. In a letter sent last week, Sens. Ted Erickson (R-Delaware), Stewart Greenleaf (R-Greenleaf), Chuck McIlhinney (R-Montgomery), Bob Mensch (R-Bucks-Montgomery) and Robert Tomlinson (R-Bucks) said they disagree with Rendell's claim that the GOP has not negotiated in good faith, but asked Senate Republican leaders to work towards a deal including environmental and safety protections, AP said.

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