The Pennsylvania Senate approved its version of an impact fee on natural gas by a narrow vote last Wednesday night, but it’s still uncertain whether Pennsylvanians will get a revenue boost or the proverbial lump of coal for Christmas.
The measure must still pass two hurdles before becoming the law of the land in the home of the Marcellus Shale. Following hours of debate where critics of the current proposal attempted to amend the legislation, House Bill (HB) 1950 passed the Senate by a vote of 28 to 22. Members of both parties broke rank to vote for and against the measure.
The Senate is adjourned for the year, and the bill is now before the state House of Representatives for a concurrence vote. If it passes, the measure would go to Gov. Tom Corbett. If it doesn’t, the bill would go into a legislative conference committee, and the contentious negotiation process would begin again. The outcome is far from certain.
As it currently stands, HB 1950 would impose an annual fee on every unconventional well in the state, starting at $50,000 and decreasing over the first 20 years of production. According to a fiscal note, the fee would retroactively raise $94 million for 2011 and more than $154 million in 2012 (see NGI, Nov. 28). The state would administer the fee, returning 55% of the revenue to counties and municipalities and using the rest for statewide programs.
That differs considerably from the original bill the House sent to the Senate (see NGI, Nov. 21). That version gave counties the option to impose an annual fee on unconventional wells, starting at $40,000 and decreasing to $10,000 over the first decade of production. It kept 75% of the revenue at the local level, using the remainder for statewide programs. A Senate committee essentially stripped out the House language and substituted its own version.
Corbett supports an impact fee, but his proposal is closer to the House version than the current bill. Still, following the Senate vote, he offered limited praise for the measure, calling it “a significant step forward toward finalizing a strong and sensible Marcellus Shale legislative package…While productive discussions are ongoing and continue to resolve the various issues related to the Marcellus Shale, [Wednesday’s] action reaffirms the strong commitment of the Senate to achieve out common goals of safe and responsible natural gas development in Pennsylvania.”
Although the Senate version would bring in more revenue and distribute it more widely than the House version, Senate Democrats still believe the measure is severely lacking, and attempted numerous times to amend the bill int e final hours of debate. Sen. John Yudichak, a Democrat from northeastern Pennsylvania, proposed a $75,000 per well fee that would have increased each year and then eventually dropped to $10,000 after the 14th year of production.
“This amendment, championed by my Senate Democratic colleagues, was a better option,” he said, following an unsuccessful committee vote. “Not only would it have provided a fair and responsible impact fee, but it also would have strengthened environmental protections and preserved local governments’ authority to regulate development.”
The amendment also would have increase environment provisions and stripped out controversial local language restricting the ability of local governments to regulate development, an increasingly contentious issue.
Last Tuesday night, more than 100 people turned out at a town hall meeting in the Pittsburgh suburb of Greentree to protest the local zoning restrictions in the bills. And in a widely published editorial, the head of the Pennsylvania State Association of Township Supervisors said that despite recent changes that made those restrictions “more reasonable,” the local government group still could not endorse the legislation as written. Additionally, a new survey from Muhlenberg College and The Morning Call of Allentown, PA, not only found the typical broad support for an impact fee, but also found that 59% of respondents favored local control of development over state control.
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