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No Pennsylvania Impact Fee This Year

Pennsylvania will end another year without an impact fee on natural gas drilling in the Marcellus and Utica shales.

The state's House of Representatives voted unanimously against House Bill 1950 on Tuesday, its last day in session for the year, setting the stage for ongoing debates about the matter when lawmakers return from their recess in January.

The state Senate approved HB 1950 last Wednesday before adjourning for the year, but the version they passed simply stripped out the original House language and substituted the terms of its proposal, Senate Bill 1100 (see Shale Daily, Dec. 16; Dec. 8). The House voted against those amendments, although individual members cited various reasons for doing so.

Calling the original HB 1950 a "win-win-win," striking a balance between the fee amount, the distribution structure and environmental protections, House Majority Leader Mike Turzai, a Republican from southwestern Pennsylvania, said, "We do not agree with the complete Senate package. Not that we don't think that there are some appropriate aspects to it."

But Rep. Greg Vitali, a Democrat from southeastern Pennsylvania, called for a conference committee as the only way to keep the bill alive for a major overhaul. "This bill has a lot of shortcomings and my hope is that we can address these as the process moves forward," he said.

The General Assembly is already taking heat for allowing another year to pass without implementing a tax or fee on natural gas production, but Rep. Camille George, a Democrat from central Pennsylvania said "debating any length of time is not irresponsible for the protections that you and I want not only for ourselves, but for those that we represent."

George and fellow central Pennsylvania Democrat Michael Hanna tried unsuccessfully to amend the bill during a committee meeting earlier in the day. During the floor vote, Rep. Eddie Day Pashinski, a Democrat from Wilkes-Barre, also attempted to amend the bill to increase the fee, change the distribution structure and impose stricter protections.

Should the Senate insist now on its changes -- something they cannot decide until next year -- the bill will go into conference committee, a procedural process for reconciling the conflicts between the proposals of the two chambers.

Philosophically, the House wants a smaller fee, administered by counties and largely funding local programs, whereas the Senate wants a larger fee administered by the state and funding local and state programs somewhat equally.

The six-member committee would include three Senators and three Representatives, with two members of each chamber coming from the majority party and one coming from the minority. Considering that a conference committee only needs four votes to pass a report and that both chambers are led by Republicans, negotiating a solution would appear simple enough, but the debate this year has revealed that region and ideology crossed party lines on the issue.

Earlier in the fall, two Republicans from southeastern Pennsylvania - the most populous area in the state, but also the only region that doesn't overlie the Marcellus or Utica - broke rank with party leadership to propose a 4.9% tax to fund many statewide programs (see Shale Daily, Sept. 26).

And Senate Democrats nearly succeeded in amending HB 1950 in the final hours of debate, claiming to gather enough Republican support, but unable to use it before Senate leadership closed the vote. The changes would have significantly increased the fee, removed controversial restrictions on local regulation and increased environmental protections such as setback and bonding levels.

"On the issue of Marcellus Shale, we have constantly stalled on real, responsible Marcellus Shale legislation," Sen. Jim Ferlo of Pittsburgh said. "Instead of providing stronger protections for Pennsylvania's environment and citizens and allowing local governments the ability to control zoning of drilling sites, the Republican Shale plan gives the industry a pass with an insufficient impact fee, lax environmental protections and ties the hands of local governments."

Although he prefers the original House version, Gov. Tom Corbett called the current bill "a significant step forward toward finalizing a strong and sensible Marcellus Shale legislative package."

The Senate isn't scheduled to return from recess until Jan. 3 and once the House adjourns it is not scheduled to return until Jan. 10.

Although the current General Assembly is in office until next November, movement on the bill could become jeopardized in early 2012 once budget discussions begin sometime in February.

The delays in Pennsylvania come as its neighbors are also thinking about increase revenue generated by the natural gas industry. West Virginia recently passed a fee, and some in Ohio are now asking the state to increase its tax rate as well (see Shale Daily, Dec. 15).

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