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New Impact Fee Legislation Introduced In Pennsylvania House

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While state House Democrats have been pushing for a broader Marcellus Shale tax, Republican Marguerite Quinn of Bucks County has introduced impact fee legislation that has bipartisan co-sponsorship.  She says House Bill 1700 would not direct any money into the general fund.

Half of the fee would be divided between counties and municipalities that host drilling sites, 5% would go to the state’s conservation districts,  15% to the Environmental Stewardship fund, 10% to the Hazardous Site Cleanup Fund and 20% to the Motor License Fund.  

The fee would start at $50 thousand per well for the first two years, drop to $45,000 for the next two years, $40,000 for the next two years, and then continue declining to $15,000 in year 15 and $10,000 in year 20.    

Representative Mario Scavello (R-Monroe) applauded the proposal, saying quite a bit of the funding would go back to local communities and that’s where the impact is the greatest.

Representative Eugene DePasquale (D-York) says the bill differs from the Senate impact fee legislation in a key area.  He says many members in the house find the local zoning provision in the Senate bill particularly troubling.   

The Senate bill (SB 1100) calls for the development of a model ordinance for zoning in drilling areas.  It would make municipalities or counties that adopt stricter

Representative Marguerite Quinn (R-Bucks)

ordinances ineligible to receive a share of the impact fee.

Marcellus Shale Protesters

Shale Protesters Complain of Inaction

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Several hundred protesters, representing 13-environmental and related groups, converged on the state capitol Tuesday.  “We keep coming back to Harrisburg because [Marcellus Shale] drilling’s been going on in Pennsylvania for almost four years now, and what has our state legislature done?  They have done nothing,” said Myron Arnowitt, Pennsylvania state director of Clean Water Action.  Arnowitt called for a moratorium on natural gas drilling, until an impact study can be complete.  Protesters also called for a Marcellus Shale severance tax.  “Poll after poll tells us that the majority of Pennsylvanians want industry to pay their fair share in taxes, and they want clean air and clean water,” said Erika Staaf, PennEnvironment’s clean water advocate. 

State Senate Democrats

Senate Democrats talk state budget priorities

The protesters’ chants started filling the state capitol rotunda mere minutes after several member of the Senate Democratic caucus concluded a separate news conference on their state budget priorities.  But, there was some overlap in the two events.  Senate Democratic leader Jay Costa (D-Allegheny) said natural gas drillers should be a part of the budget solution, not a part of the budget problem.  “We believe that the conversation about the Marcellus extraction tax must take place now, must take place as a part of this budget, and must be as comprehensive as possible,” Costa said. 

Democrats and Republicans in Harrisburg have come forward, this session, with a variety of Marcellus Shale severance tax and/or impact fee proposals.  Governor Tom Corbett made a no tax pledge during the 2010 campaign, but has left the door open for a local impact fee, as long as no revenue goes to pad state coffers.  Corbett’s Marcellus Shale Advisory Commission has meetings scheduled through July 15th.  Their recommendations are due at the end of July, however the state budget deadline is June 30th.

Marcellus Shale

Study Projects Economic Impact of Marcellus Shale Tax, Fee Proposals

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A new study from Penn State’s Institute for Research in Training & Development treated the Marcellus Shale severance tax and impact fee proposals as added production costs to the gas producers.  Professor David Passmore says the four proposals they considered differed based on how they handle exemptions, and how high the tax rate is over time.

“I think what’s important here, even though there’s variation in the impact, the impact of any of these would be relatively small compared to the size of the Pennsylvania economy,” Passmore says.  For example, he points to the potential impact on employment.  He says the highest tax year proposal would have an impact of about 3,200-jobs.  “Now this is at a time when we’re talking about 7.5-million project jobs.” 

When projecting the impact on gross state product, the four proposals range from a ten million dollar hit (using State Rep. Kate Harper’s HB 1406) to a $272-million dollar hit on GSP (using State Rep. Greg Vitali’s HB 33).  Those numbers are mere fractions of a percent of Pennsylvania’s projected $598-billion dollar gross state product in 2015.    

 While the overall economic impact of the plans is small, professor Rose Baker points out the impact could be significant to a small company or to an individual who doesn’t land a job because of them.  Passmore and Baker hope their numbers are considered in relation to the decisions policymakers must make in terms of imposing a tax or a fee on the Marcellus Shale industry.  “We need to begin working together with the industry to reap some of these benefits that are flowing in, and kind of get past the tax question,” Passmore says. 

In addition to the Vitali and Harper plans, which were referenced earlier, Passmore and Baker studied Senate President Pro Tem Joe Scarnati’s SB 1100 and Senator John Yudichak’s SB 905).  State Rep. Greg Vitali (D-Delaware) will attempt to force a State House vote on his legislation on Tuesday, according to a statement.  Vitali says Pennsylvania is the only natural gas-producing state that does not have a drilling tax or fee.