February 7, 2012 | By | Posted in Legislature

UPDATED: Marcellus shale fee bill set for final votes in PA House, Senate

Conference committee OKs compromise bill Monday night
By Eric Boehm | PA Independent
HARRISBURG — Months of negotiation on a Marcellus shale impact fee have yielded an agreed-upon product the Pennsylvania House and Senate could pass as early as Tuesday night.

But the final product has some asking if the “fee” should really be called a “tax.”
Republican House and Senate leadership announced the compromise bill Monday evening and moved it quickly into position to pass both chambers of the General Assembly this week. 
The negotiations that produced the final bill took place behind closed doors, and a formal conference committee met for an hour Monday evening to approve the compromise legislation.
The state Senate has scheduled a vote for 10 a.m. Tuesday morning — an hour before Gov. Tom Corbett delivers his budget address — and the state House could vote on the bill Tuesday night or Wednesday morning, sending it to Corbett’s desk for a final signature.
No amendments are allowed on the bill.
“This is a compromise between the House, the Senate and the governor,” said Senate President Joseph Scarnati, R-Jefferson, who made the shale fee his No. 1 priority this summer. “We’re looking for that balance of creating jobs and protecting the environment.”
The compromise bill will impose a 15-year fee that would total between $190,000 and $355,000 per year for each well, depending on changes in the price of gas during the fee period. Each active well will pay $310,000 in retroactive fees for 2011, based on the price of gas during the year.
The Senate initially had proposed a higher fee over 20 years, while the House wanted a lower fee over 10 years.
The fee will be authorized at the county level, but if a county decides not to impose the fee, it can be overruled by a majority of the municipalities within it.
Wells producing less than 90,000 cubic feet of gas per day would be exempt from the fee.
Conference committee members state Sen. John Yudichak, D-Luzerne, and state Rep. Mike Hanna, D-Clinton, voted against the compromise plan because they wanted more revenue to be generated.
“This bill falls far short of what the people of Pennsylvania expect from us,” Hanna said.
Conference committee members Scarnati, state Sen. Mary Jo White, R-Venango, and state Reps. Dave Reed, R-Indiana, and Brian Ellis, R-Butler, who served as chairman voted for the bill.
“Everybody has a different definition of perfect,” said Reed. “Eventually you have to get down to the business of governing.”
The Pennsylvania Public Utility Commission, which oversees and regulates utility companies in the state, would collect and distribute the fees. Revenue would be split, with 60 percent going to local governments in areas that host natural gas drilling and 40 percent to a new state fund, the Marcellus Legacy Fund.
The new fund would distribute revenue to various state-level initiatives, including acid mine drainage, abandoned oil and gas well plugging, sewage treatment and flood control projects.
Another portion of revenue from the Marcellus Legacy Fund would go to the state’s transportation fund to pay for repairs to local roads and bridges in the Marcellus zone, and a final portion of the funding would be directed to the Environmental Stewardship Fund, which pays for a range of “green” initiatives statewide.
Up to $20 million in fee revenue annually would be used to buy or convert state vehicles to run on natural gas. Municipalities, the Pennsylvania Turnpike Commission, nonprofits and state universities would be eligible to participate in the new program.
The Commonwealth Foundation, a fiscally conservative think tank here, said the proposal crossed the line of being a tax, because it tied the fee to the price of natural gas, rather than to the impacts caused by the industry.
“A tax by any other name, no matter how artfully crafted, is still a tax,” said Matt Brouillette, foundation president.  “Raising new taxes just to redistribute them to unrelated political projects isn’t just bad policy, it will kill jobs and increase the costs of energy for Pennsylvania’s families.”
Corbett promised not to sign a tax increase, when he signed the Americans For Tax ReformTaxpayer Protection Pledge” in 2010 during his gubernatorial campaign. The fiscally conservative group had declared the House and Senate natural gas fee proposals as taxes.
Ellis said the bill was a fee, because it was enabling legislation that allows each county to decide whether to impose the fee.
“I believe it is a fee, because it is collected from this industry, just like we collect fees from other industries, and we use it to address the impacts of drilling,” Ellis said. “The distribution, even on a statewide level, is directly related to impacts of drilling and the environmental programs that we are trying to continue.”
The compromise plan drew positive reviews from the Renew Growing Greener Coalition, a collection of environmental, governmental and recreational groups in the state. The coalition has pushed for the revenue from a Marcellus shale fee to help support the Environmental Stewardship Fund, which uses taxpayer funds to pay for environmental projects.
The Chesapeake Bay Foundation, an environmental advocacy group, pointed to increased setback requirements and floodplain protections included in the bill.
Two local government groups, the County Commissioner’s Association of Pennsylvania and Pennsylvania Association of Township Supervisors, sent letters to lawmakers Monday expressing support for the compromise plan.
The compromise bill would preserve the right of local zoning ordinances to restrict industrial activities, including natural gas drilling, as long as such ordinances do not single out natural gas drilling for more stringent requirements.
This story was updated to clarify Rep. Brian Ellis' position on the fee.
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