Marcellus Shale Legislation Passed Through State Senate
8th February 2012
The state Senate passed a Marcellus Shale regulatory and impact fee measure this morning February 7, 2012, sending the plan for a final vote in the state House of Representatives.
The near party-lines vote of 31-19 delayed Gov. Tom Corbett's budget address on his proposed spending plan for the 2012-13 fiscal year, which was expected to begin at 11:30 a.m.
A six-member conference committee of Republican and Democratic lawmakers from both chambers gave a party-lines approval to the measure Monday evening.
Senate President Pro Tem Joe Scarnati, R-Jefferson, who has been a key advocate for assessing a fee on natural gas drillers, bristled against Democratic criticism that the plan's speedy vote after final details were ironed out last weekend.
The issue of a levy on Marcellus Shale wells has been debated in the state Capitol for three years, with past attempts to create a severance tax repeatedly falling short. Mr. Scarnati said he has "tromped through this subject with two governors" as the number of Marcellus wells boomed, and worked for months with Senate Democrats to incorporate some of their shale-related suggestions.
"I don't stand up here to tell you I delivered a bill myself -- we did this together," Mr. Scarnati said. "We would not be here today without the strong leadership of Gov. Tom Corbett."
The Republican-negotiated measure melds the fee amounts in previous bill into a tiered system pegged against the price of natural gas, which would raise between $190,000 and $355,000 per well over 15 years. That fee is projected to raise more than $190 million retroactively for 2011, rising to $333 million by 2015.
Mr. Scarnati defended that fee as "landed in a good spot" compared to past proposals. He added that it will be adjusted annually based on the consumer price index, "so that as impacts cost more to address, the fee will cover them."
Of the fee revenue, 60 percent of the funds would be distributed to local governments with gas drilling, with the remaining 40 percent to be deposited into a state Marcellus Legacy Fund.
Each county would be able to decide whether to charge the fee, which would be collected and distributed by the state Public Utility Commission. If a county decides not to charge a fee -- and thus forfeit its share of local fee dollars -- officials in half of the municipalities in the county could override that decision by voting to charge the fee.
That county-option for assessing the fee drew opposition from several Democrats, including Sen. John Yudichak, D-Luzerne, who voted against the proposal during Monday evening's conference committee meeting. He said there are "no assurances" that local governments would approve that fee, which he also slammed as "woefully inadequate."
"I hope we are not setting up for future Pennsylvanians to pay for the mistakes of this generation," Mr. Yudichak said. "I think we could have built a little more certainty into this bill."
In addition to the impact fee portion, the measure expands dozens of environmental rules. Among other changes, it would boost penalties and setbacks from waterways, require more disclosure of hydraulic fracturing chemicals, and mandate more comprehensive containment procedures for spills.
It also would prohibit municipalities from regulating drilling activities more stringently than other industrial activities if they want to remain eligible for the fee revenues.
The state Public Utility Commission would review those local ordinances upon request, and rule whether they are reasonable based on state-proscribed guidelines. Localities may ban drilling in residential areas if they are so densely populated that no well site can be placed where the wellhead would be 500 feet away from a building.
The proposal now awaits a vote on the House floor, which could occur as soon as this evening.
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