Marcellus Shale Levy Advances

For the first time, a Senate committee has approved an annual levy on Marcellus Shale drillers.
The Environmental Resources and Energy Committee unanimously approved a natural gas drilling impact fee this morning. An amendment introduced by Chairwoman Mary Jo White changed the fee’s structure. Instead of a $10,000 base fee with multipliers based on production volume and gas prices, the fee would begin at $40,000, and gradually reduce to $10,000 over four years. The fee would be phased out, after a well’s tenth year of production.

White’s language would send an annual $1 million payment to the Office of the State Fire Commissioner. The money would be used “to support training programs for emergency responders” and “provide grants to fire departments for the purchase of special equipment required to respond to fires and other emergencies,” according to White’s amendment memo. It would also divert municipalities’ share of the fee from environmental programs to affordable housing initiatives.

White, however, warned lawmakers and observers not to spend too much time dwelling on the changes. “Obviously this is not the final product,” she said before the vote. “Some of my colleagues on both sides of the aisle have given us some input that made it into this bill. Some of the things in here may not survive.”

The committee’s 11-0 vote is a bit misleading. Several Democrats on the panel made it clear they were voting yes to advance the bill, despite problems with its language. Freshman Democrat John Yudichak said he’s most concerned with the legislation’s model local zoning ordinance, which would set a statewide standard for municipal shale regulations, and bar townships passing stricter rules from receiving any fee money. “I think the Townships Association said it best when they said this would be ‘setting a horrible precedent for local zoning.’ …I know it’s of great concern to many of my colleagues, on both sides of the aisle,” he said.

Scarnati attended the meeting and voted for the changes. He’s sticking to his insistence that the fee become law alongside the state budget, despite resistance from House Republican leaders and Governor Corbett. “There is the political perception that although these dollars will not be able to fill the vast holes we have in many of the line items in the budget, the public has a perception that while we are cutting many line items in this budget, we are allowing an industry in this commonwealth to go without paying their fare share,” he said, adding both Republicans and Democrats would consider inserting fee language into budget bills, if the House doesn’t seriously consider his measure. A new Quinnipiac University poll shows nearly 70 percent of Pennsylvania voters support some sort of tax or fee on gas drilling.