While the industry was preaching compromise legislation with balanced regulation and taxes on natural gas in Pennsylvania, environmental groups urged lawmakers to start over, splitting the task into four separate bills.

The Marcellus Shale Coalition (MSC) on Friday urged leaders in Harrisburg “to avoid the temptation of crafting policy in a vacuum and instead design a fee and regulatory structure that not only provides heightened safeguards to the public, but also a competitive investment climate.”

MSC President Kathryn Klaber highlighted the benefits the Marcellus Shale has brought for Pennsylvanians, at the same time warning “the natural gas industry — like any other industry — cannot grow amid continually increasing costs, nor can it make the proper long-term investments in new infrastructure, new jobs and new equipment if that money instead must be used to pay new taxes or higher fees.

“In one year alone, the industry has provided $1.6 billion in royalties and bonus fee income to local landowners,” she said. “Residents now enjoy lower energy bills, with one conservative estimate showing consumers saving a total of nearly $650 million in 2011.”

She added that besides investing more than $400 million in roads and related infrastructure, the industry also has paid an estimated $1 billion in state and local taxes during the last five years. The natural gas industry also supports nearly 230,000 jobs throughout the commonwealth, according to state labor data.

Meanwhile, a coalition of environmental groups is calling on the lawmakers to take a new approach, either by starting the process over or dividing the omnibus legislation into four separate bills.

Citizens for Pennsylvania’s Future (PennFuture) released a report last Tuesday blaming the continuing delays come from a failed attempt by lawmakers to address too many issues at once. PennFuture called for the General Assembly to “junk the whole thing and start over again.”

The eight-page report suggests breaking the existing legislation into four parts: one enhancing environmental regulations, one imposing a severance tax, one enacting a moratorium on developing additional public lands and one creating a legacy fund from public revenues.

“By combining consideration of safety regulations, a drilling tax, restructuring the Oil and Gas Lease Fund and local government control issues, legislative leaders force their members to accept the lower common denominator on all these issues in order to get to a deal,” the report said.

The state Senate and House of Representatives approved competing impact fee proposals in November 2011, but couldn’t a reach a compromise between the different bills (see NGI, Nov. 21, 2011). The Senate eventually moved HB 1950 in mid-December — on its final day in session for the year — by replacing the original language with its own. The House voted those changes down on its final day before the winter recess (see NGI, Dec. 19, 2011).

The state Senate is expected to vote soon to send HB 1950 to a conference committee, where members of both chambers and both parties will try to come to a compromise. The six-member committee would include three senators and three representatives, with two members of each chamber coming from the majority (Republican in both houses) party and one each from the minority.

Considering that a conference committee only needs four votes to pass a report and that both chambers are led by Republicans, the process appears difficult to hijack at this point, but the debate this year has revealed that region and ideology trump party lines when it comes to shale.

The PennFuture report followed an anti-drilling rally on the Capitol steps Tuesday led by a collection of environmental groups including PennEnvironment, Clean Water Action and the local Sierra Club chapter. The protesters held signs demanding that lawmakers “Kill the Bill.”

PennFuture noted that the upcoming state elections later this year, in recently redrawn state legislative districts, mean lawmakers are “paying closing attention to citizens — and no issue has the citizens more engaged than deep natural gas drilling.” It also noted that an attempt to significantly amend the legislation before the recess appeared to gain enough bipartisan support to pass, but failed because Senate leadership closed the vote during deliberations.

The primary differences between the two bills are the structure of the impact fee and the distribution of the revenue collected from it. 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.

While impact fee legislation continues to be a question mark, other shale-related legislation is gaining traction in Pennsylvania. The General Assembly passed Senate Bill 995, a bill requiring drilling companies to provide to state and local authorities detailed emergency contact information for all of their wells in the state. The bill is currently before Corbett, awaiting final approval.

And late last year Rep. Sandra Major, a Republican from prolific Susquehanna County, introduced House Bill 2087, a bill that would use 5% of the Oil and Gas Lease Fund, the holding place for revenue from development on public lands, for “conservation, recreation, dams or flooding control,” or as a state match for federal grants made for any of those efforts.

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