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Marcellus Commission: PA Should Consider Impact Fee, Pooling Mandate

A public commission established earlier this year to guide Marcellus Shale policy in Pennsylvania is recommending that the state consider an impact fee on natural gas drillers and look at conservation statutes that include forced pooling, among 96 total recommendations.

After four months of meetings, some that became public spectacles not uncommon in shale debates, the 30-member Marcellus Shale Advisory Commission approved 130 pages of recommendations at its final meeting last Friday. The Commission chair, Lt. Gov. Jim Cawley, said he plans to finalize those recommendations on Tuesday and formally deliver a written strategic plan to Gov. Tom Corbett this week.

"For the first time, we now have a comprehensive and strategic plan, a foundation upon which to begin our work. However, foundations are meant to be built upon and that's what we intend to do,"Cawley said after the commission unanimously adopted the recommendations.

The recommendations are set to be released to the public this coming Friday.

Cawley described the strategic plan as "the end of the beginning" of public efforts to guide shale policy, because now policymakers must decide which recommendations to pursue and then set about actualizing them through legislative and regulatory initiatives.

"No work begins until [Corbett] says go," Cawley said.

The process could test Corbett's previous stands on certain issues.

While Corbett never ruled out an impact fee, as he did with a severance tax, he repeatedly said he wouldn't consider supporting one until his commission clearly defined the impacts of development on local communities (see Shale Daily, June 27; March 25). And Corbett explicitly said he opposes forced pooling, a regulatory process that allows a company to drill beneath the property of a landowner without having a lease in order to promote the conservation of resources (see Shale Daily, April 27). Corbett called that "private eminent domain."

The commission did not out and out endorse an impact fee, but said local communities aren't being entirely compensated for impacts from development. And while the commission did not recommend forced pooling, it said conservation statutes need to be "modernized."

The recommendations made public so far, though, also include many other technical and less contentious issues.

Cawley formed four working groups to consider public health, safety and environmental protection; economic and workforce development; infrastructure; and local impacts and emergency response (see Shale Daily, March 29). The final report includes 26 recommendations for economic development, nine for local impacts, 18 for infrastructure and 43 for health and safety.

For example, Pennsylvania Department of Environmental Protection (DEP) Secretary Michael Krancer proposed stricter regulations, including manifests to track hydraulic fracturing fluids and higher bonding amounts (see Shale Daily, June 6). And Pennsylvania Department of Health Secretary Eli Avila said the state should create a registry to monitor the health impacts of development (see Shale Daily, June 21).

Corbett convened the commission in March, upon releasing his first budget, giving the 30-member panel just 120 days to figure out what the state needed to do to maximize the benefits of shale development while minimizing the negative side effects (see Shale Daily, March 9).

During budget negotiations, state lawmakers pushed to include a severance tax or an impact fee, but Corbett repeatedly said he would veto any budget that increased taxes and would not consider an impact fee until after the commission released its findings. Ultimately, Corbett signed the first on-time state budget in nine years, but lawmakers saw three consecutive budget cycles go by without a tax or fee included.

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