A Democratic state senator has introduced legislation in the Pennsylvania General Assembly to allow local municipalities and school districts to tax natural gas pipelines.

Sen. Andy Dinniman, who represents Chester County in the southeast part of the state that's removed from Marcellus Shale development, introduced SB 905 last week to allow local governments and school districts to impose a real estate tax on natural gas and hazardous liquids pipelines. Pennsylvania does not treat pipelines like permanent property, and they are currently exempt from local taxation.

Dinniman said it's "only right that pipeline companies pay a real estate tax just like property owners," noting that although natural gas drilling is not occurring in the region he represents, "pipelines crisscross nearly every municipality in Chester County and more are on the way," there and across the state.

He added that his bill reflects the growing number of natural gas pipelines in the state and their potential impact on local communities, echoing a growing debate in the Northeast about pipeline development and, in particular, Pennsylvania's inability to raise local taxes against them (see Daily GPI, Jan. 23). Meanwhile, negotiations continue in the legislature about Gov. Tom Wolf's proposal to tax oil and natural gas production at 5% (see Shale Daily, Feb. 11).

The state Department of Environmental Protection expects 25,000 miles of gathering lines and up to 5,000 miles of transmission lines to built in the state over the next decade in addition to the infrastructure that has already been constructed to move growing volumes of Marcellus Shale gas (see Shale Daily, May 28).

"Twenty other states allow for the local taxation of natural gas pipelines and this bill is very similar to existing laws in neighboring states like New Jersey, Ohio and West Virginia," Dinniman said.

Industry trade groups could not be reached to comment about SB 905 late Tuesday. Several proposed interstate pipeline projects that would cross Pennsylvania, however, have recently released reports about the jobs, sales tax and other state revenues they would help to create during construction and once operational (see related story; Shale Daily, Feb. 6; Dec. 2, 2014).

Dinniman, along with Republican state Sen. John Rafferty, who also represents parts of southeast Pennsylvania, co-sponsored legislation last year to enact an impact fee on natural gas gathering and transmission pipelines similar to what the state collects for unconventional wells in the state (see Shale Daily, Dec. 18, 2014). That bill stalled in the Environmental Resources and Energy Committee but has since been reintroduced and was referred to committee earlier this year.

That bill, SB 557, would calculate fees for pipelines based on their linear foot acreage and right-of-way width using county average land value in affected areas. The fees would be collected by the Pennsylvania Public Utility Commission and deposited into a pipeline impact fund for distribution to local governments.