Shale Daily / NGI All News Access

Election Outcome Could Shift Pennsylvania's Marcellus Policy

A proposed severance tax on natural gas drilling in Pennsylvania may be dead this year, but the issue could return during the 2011 legislative session and it lives on in the campaigns of the candidates for governor. With Democratic Gov. Ed Rendell leaving office in January and the makeup of the state's currently Democrat-dominated House and Republican-dominated Senate likely to change with the Nov. 2 election, Pennsylvania's Marcellus policies could be looking at a facelift next year.

A survey of 750 likely voters conducted Oct. 21 by Rasmussen Reports found Republican Tom Corbett holding a 5-point lead over Democrat Dan Onorato in the governor's race, with 50% of respondents saying they planned to cast their ballots for Corbett and 45% Onorato. Other recent polls have showed Corbett maintaining a narrower lead, with 48% in his favor and 46% for Onorato.

Pennsylvania has an unbroken record going back more than 60 years of alternating Democratic and Republican governors every eight years. Rendell, a Democrat, was elected governor in 2002.

Corbett, who is currently the state's attorney general, has vowed "no new taxes" and said he opposes a severance tax on natural gas. Corbett's energy plan includes a call for creation of a Marcellus Shale work group to advise the state and industry on legislative and regulatory changes, while also working with state agencies to ensure that state parks, game lands and forests are protected. The plan would also dedicate a portion of existing royalty payments from gas drilling on state land to communities that have been impacted by drilling for infrastructure improvements.

Onorato, the current chief executive of Allegheny County, PA, has called for a "competitive" gas tax. His energy plan includes an "impact tax" on companies that extract gas in the state to "bring Pennsylvania in line with other gas-producing states." Revenue from the tax would be used to reverse cuts to the state's Department of Environmental Protection's (DEP) operations and to ensure that DEP has adequate resources to regulate Marcellus Shale development, and to provide resources to the local communities impacted by Marcellus Shale extraction, according to the plan. Onorato has also said he would develop a plan to ensure that Pennsylvanians get their fair share of Marcellus jobs, and will use Pennsylvania's natural gas supply and infrastructure to attract other businesses to the state.

Rendell and the Senate's GOP leadership have sparred over energy policy for some time, culminating in his decision this week to place an immediate ban on leases for oil and gas development on state forest land (see Shale Daily, Oct. 27). Rendell has said the Senate didn't negotiate a severance tax on natural gas drilling "in good faith;" Senate Republicans deny the accusation and have said the House may have violated the state's constitution by adding the tax language to a county bonding bill -- a charge Rendell and some Democrats have labeled "a red herring" (see Shale Daily, Oct. 22).

Republicans currently hold a 30-20 majority in the Pennsylvania Senate, while Democrats hold a 104-99 majority in the state's House. All of the House seats and half of the Senate seats are up for election this year. Of the 228 races, only 134 have candidates from both parties on the ballot.

In the House races, Democrats will "easily" win 85 seats and Republicans 81, according to Pennsylvania Independent, a project of the Harrisburg, PA-based Commonwealth Foundation. Districts considered "likely" to go one way or another would give Democrats a total of 91 House seats and Republicans 95 seats, with 16 others, which are considered "toss ups," determining control of the House, according to Pennsylvania Independent analysts.

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