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Pennsylvania Committee Moves Drilling Impact Fee Forward

A Pennsylvania state Senate committee passed amended impact fee legislation on Monday that returned an impact fee to the bill, added environmental safeguards and changed the way the bill would govern local ordinances over oil and gas drilling.

On a largely party line vote, the Senate Appropriations Committee passed a version of Senate Bill 1100 that included a major amendment by its prime sponsor, state Senate President Pro Tempore Joe Scarnati, a Republican from central Pennsylvania. The committee previously removed the fee from the bill in late October in order to iron out other, less controversial sections of the measure (see Shale Daily, Nov. 2; Oct. 28).

Scarnati said the fee would be equivalent to a 3% tax on drilling companies. The bill would impose a $50,000 annual base fee on each unconventional well in the state that declines to $40,000 in the second year of production; $30,000 in the third year; $20,000 in the fourth through 10th years; and $10,000 through the 20th year. The fee also includes an adjustment tied to natural gas prices that kicks in at $5/Mcf.

That fee structure is higher than the $40,000 starting point included in an earlier version of the Senate bill, a competing bill currently moving through the state House of Representatives and a proposal from Gov. Tom Corbett (see Shale Daily, Nov. 4).

The new SB 1100 would send 55% of the revenue collected from the bill to counties and local municipalities that host drilling, and the remainder to statewide programs.

The Corbett proposal and House bill would keep 75% of the revenue at the local level.

The amended bill also removed a "model ordinance," but included a section designed to guide -- some say limit -- how local municipalities can regulate development.

Only one Democrat on the committee voted for the bill. Minority Vice Chair Sen. Jim Ferlo (D-Pittsburgh) proposed an amendment that would have imposed a $75,000 annual fee on unconventional wells and preserved all local zoning power.

"My amendment would have provided stronger protections for Pennsylvania's environment and citizens, allowed local governments the ability to control zoning of drilling sites and given homeowners in the Marcellus Shale region much needed peace of mind," Ferlo said, promising to "continue the fight on the Senate floor."

Meanwhile, the state House continues to debate more than 100 amendments proposed for House Bill 1950, its competing impact fee legislation. Those amendments include everything from entirely revised fee structures to environmental provisions.

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