Some local officials question whether impact fee is needed at all

By Eric Boehm | PA Independent

HARRISBURG — The top Republican in the state Senate and Gov. Tom Corbett are at odds over how to handle a possible new fee on natural gas drilling companies operating in Pennsylvania.

Senate President Joseph Scarnati, R-Jefferson, last week announced a proposal to implement a “local impact fee” on gas companies operating in the state to cover costs incurred by counties and municipalities hosting the industry. None of the revenue from the proposed fee would go to the state’s budget.

Scarnati said the proposal should be considered along with the state budget, which must be passed by the General Assembly before the end of June. 

Corbett, meanwhile, formed a Marcellus shale commission to study, among other things, the impact of the industry on local governments’ infrastructure, human services and legal costs. The commission is not scheduled to wrap up its meetings until June 30. It has until the last week of July to submit a formal report to the governor, including recommendations for taxes and fees.

Drew Crompton, Scarnati’s spokesperson, said the senator hopes the commission would have a preliminary report available much sooner.

“Sen. Scarnati remains committed that a shale impact fee be completed with the 2011-12 budget,” Crompton said. “His hope is that the governor’s commission completes an interim report no later than June 1st.”

The state Senate has been studying the Marcellus shale issue for more than a year through the committee process, yet Corbett did not include any members of the Legislature on the commission.

“The senator lives in an impacted Marcellus region and knows the local and statewide needs very well,” said Crompton. “This is the danger of a study commission with no legislative members.”

Asked if there was friction between the senator and the governor on the issue, Crompton said the two sides were “just differing on timing.”

But the commission is not planning to speed up its schedule to accommodate the Legislature.

Earlier this week, Lt. Gov. Jim Cawley, chairman of the Marcellus shale commission, said he would not be changing its schedule.

“Our schedule is July 22,” Cawley said. “But I have and will continue to talk with Scarnati and his staff about their proposal."

At the commission’s first meeting, Cawley said a severance tax to fund the state’s budget was off the table for consideration. However, the commission would consider a local impact fee if “measurable” impacts could be identified, said Cawley.

The commission broke into four working groups, one of which is considering the local impact of the drilling industry.

“I think there are (local costs), and the organizations have said they would start focusing their work in that direction,” Cawley said.

One of those organizations, the County Commissioners Association of Pennsylvania, gave preliminary approval to the Scarnati impact fee plan last week. On Thursday, executive director Douglas Hill said he was waiting to see a formal proposal, but the concept was in the right place.

Two industry groups — the Marcellus Shale Coalition and the Pennsylvania Independent Oil and Gas Association — have given initial approval to the Senate impact fee plan but are waiting more details before commenting further.

The one question that no one in Harrisburg seems to be asking is whether a local impact fee is even necessary. Doug McLinko, a Bradford County commissioner, said he doesn’t think it is.

“They are 150 miles away and they are trying to figure out what the impacts are,” said McLinko of the lawmakers and the governor’s commission.

According to the most recent figures from the state Department of Environmental Protection, there are 169 Marcellus wells in Bradford County, the most of any county in the state. The county also has the lowest unemployment rate in the state, at 6 percent in March, the most recent month for which statistics are available. The statewide unemployment rate stood at 7.8 percent in March, while the national rate tallied 8.8 percent.

“Anyone who wants to get a job can have one in Bradford County,” said McLinko. “And if it works here, it should work for the rest of the state.”

Since 2006, the natural gas industry has paid more than $1.1 billion in local and state taxes, according to the Department of Revenue. McLinko said the industry has also spent more than $100 million on repairs to roads and infrastructure in his county alone.

Jeff Wheeland, a Lycoming County commissioner and a member of Corbett's panel, said the commission still is gathering testimony and identifying the impacts before a preliminary report can be put together. He said the infrastructure impacts of the industry have been minimal.

“Certain areas have been (impacted), but most of the reports I’m getting back say the industry is fixing the roads better than they were before,” Wheeland said.

According to the Marcellus Shale Coalition, natural gas companies spent more than $200 million in 2010 on road repairs and improvements in Pennsylvania.

Hill said there is still a need for a local impact fee because it is “virtually impossible” to quantify all the costs of the industry. He said the gas industry has done a good job on road and infrastructure, but counties were seeking help on other costs, particularly in the human services sector.

“We have no means to compel them to pay right now,” Hill said. “Do we want to rely on a system that is purely ad hoc?”