PA Marcellus Shale (Gov. Corbett) Gas Fee vs Severance Tax

We lean with Governor Tom Corbett in considering a fee on the Oil and Gas industry/drillers vs a new gas severance tax. We don't think the latter would pass Constitutional review, and years and years would go by before anything is determined from litigation.

Gas fee proposed by state to benefit locals

By Brad Bumsted and Andrew Conte
TRIBUNE-REVIEW
Friday, April 29, 2011

http://www.pittsburghlive.com/x/pittsburghtrib/news/regional/s_734427.html#ixzz1Kun9kmCs

In the meantime, drillers are willing - it appears - to the imposition of a fee to be imposed and its proceeds to be kept at the local level.

That makes far more sense than having any revenues from the tax go first to the state (in part to cover the state budget deficits created by past Administration) then some to the localities where the drilling occurs.

We urge as well that the Governor review the potential any of the gas itself go to China, rather than wholly being distributed across Pennsylvania, and held in reserve for future generations of Pennsylvanians.

No gas to China and energy independence should be the slogans for a renewed Pennsylvania.

Net the Truth Online

Gas fee proposed by state to benefit locals
By Brad Bumsted and Andrew Conte
TRIBUNE-REVIEW
Friday, April 29, 2011 Last updated: 7:14 am

HARRISBURG -- A much-anticipated proposal by the Senate's top Republican to levy a fee on Marcellus shale gas drilling touched off debate on Thursday among supporters and opponents over the industry assessment and who would get the money.

Senate President Pro Tempore Joe Scarnati, R-Jefferson County, said his bill -- to be introduced in a week or so -- gives 60 percent of the collected fees to counties and municipalities with deep wells, as well as townships and boroughs that neighbor drilling production sites. The bill splits the other 40 percent between conservation districts statewide and environmental funds for cleanup and infrastructure, although he said that's up for negotiation.

The fee would be retroactive for 2010 and would raise $45 million for last year. It would bring in $76 million this year and would rise to at least $150 million by 2014, Scarnati said.

"I have to believe this is in the sweet spot of where I believe most legislators will be," Scarnati said.

The senator said it was an attempt to meet the parameters of fellow Republican Gov. Tom Corbett, who opposes a severance tax but has said he would consider such an impact fee if the revenue remains in local hands and does not go into the state general fund.

"It's the beginning of a discussion," said Kevin Harley, Corbett's press secretary.

Governments would use the fee to help cover damage to roads and bridges, for maintenance and improvement costs for water and sewage systems, and for emergency responder costs, Scarnati said.

Scarnati said it is a fee and not a tax because the money does not go to the state general fund.

"What's the difference between a fee and tax? Gov. Corbett's pen," Scarnati said. "That will be the ultimate test."

The Pennsylvania Independent Oil and Gas Association, which has opposed a severance tax in the past, issued a statement saying its members are open to discussing an impact fee that raises money to offset problems caused by the industry.

Drillers are open to an impact fee that provides money for local communities as long as it's "clear, straightforward and competitive," Kathryn Klaber, president of the Cecil-based Marcellus Shale Coalition trade group, said in a statement.

"Our industry understands that while there are tremendous financial opportunities in Marcellus shale development, there also can be impacts felt by our host communities," Klaber said.



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