Gov. Tom Corbett has presented a plan that would allow county and municipal leaders in Marcellus Shale drilling areas to enact an “impact fee.” The plan essentially requires impact fee proponents to show how much their budgets have been inflated by the presence of drilling operations, then establish a fee of between $10,000 and $40,000 a well.
Several lawmakers, on both sides of the aisle, are sticking to the idea any tax should be state-based rather than county or municipal based.
“We’re not at all in step, but then again that’s not a partisan industry,” said Rep. Dan Moul, R-91, earlier this week. “Some Democrats don’t want it (a tax or impact fee) because there is drilling in their [district, and] because it’ll hurt the industry.”
For nearly the past two years, Moul has promoted a statewide severance tax on natural gas from the Marcellus Shale, citing similar levies in other gas-producing states.
“I have always been one that said right from the start if they put a reasonable tax – the average of the other states – I will vote in the affirmative,” Maul said.
He said two factors guide him: “75 percent of my constituency wants the tax, [and] we’re the only state that does not have a severance tax of the 31 gas producing states.”
He pointed out consumers are not charged a lower rate for gas from a non-taxing state, meaning if the commonwealth does not apply a tax, the industry pockets additional profit.
Rep. Gene DiGirolamo, R-18, and Rep. Tom Murt, R-152, are promoting a 4.9 percent tax on Marcellus drillers. Published reports say the Philadelphia-area lawmakers estimate the tax would result in more than $500 million in its fifth year.
Moul said he opposes the bill “because the money is weighted toward Philadelphia.”
The discussion about a statewide severance tax becomes complicated when it comes to allocating the income.
“Right now, there’s a hundred different hands sticking through every legislator’s door,” he said, noting some of target recipients include Growing Greener, recycling and mental retardation programs.
Impact fees must be targeted for specified purposes, but have other problems, according to state Rep. Dave Reed, R-62.
They would require each jurisdiction to show how much its budget had inflated from such factors as road damage and expanding emergency response system owing to the exploding population of well workers. The result would be a range of fees rather than a single fee in all areas.
Uniformity is important to the industry, Reed said Thursday afternoon.
“I come from an area that’s been producing natural gas for about 100 years,” he noted.
But he objected to a state severance tax that would be deposited in the state’s General Fund.
“I thought the premise that we should pass the severance tax just to balance the budget,” he said, “was a false premise.”
He did not oppose counties and municipalities receiving a share of the money, but said there were related state-provided functions that could benefit, as well – for example, the state fire marshal, Department of Environmental Protection, and Department of Conservation and Natural Resources.
He said some of the money should also be used to prepare “for impacts that could result from this industry for the … next 20 to 50 years.”
Natural gas production in Reed’s district has historically been from shallow wells. Drilling 8,000 or more feet down and “fracking” – breaking the shale with water and chemicals under high pressure to release the gas – could have as yet unforeseen, potentially damaging, effects.
“It’s not as though you’re taking money from the energy industry [and] putting it into the general fund,” Reed said. “I am open to that discussion.”
Published reports have named some Democrats favoring a statewide tax, showing bipartisan support for a state-level levy. On the other hand, Lycoming County Commissioner Jeff Wheeland cautioned against an impact fee during a Marcellus Shale Advisory Commission meeting in July. He said such a fee might result in the industry stopping its voluntary contributions to road repair in drilling areas.
But environmental organizations point out environmental accidents could affect water users downstream, and even affect waters out of state.
“We had an emergency fund in [Pennsylvania] up until about three years ago,” Moul said, “and there was almost $1 billion in it.
“Rendell raided it and used it for budgetary reasons and grants to private industry,” he added.
He acknowledged the industry has been putting money into DEP, “but not a ton.” The infusion has resulted from permit fees increased to cover expenses of permit reviews, engineering and on-site inspections.
“Before, the permit fee didn’t even cover the cost of sending an inspector out to look at it once in awhile,” Moul said.
According to the industry, Marcellus Shale gas will give the companies profits from customers primarily from Virginia to Maine.
Some of that money should be used to guard against as yet unknown effects of fracking, or of a large-scale accident that could affect an area equally as large, leaving taxpayers with the cleanup bill.
Photo by Tom Owad
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