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Some Call for Special Session on Marcellus Shale

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Map of the Marcellus Shale

It’s been three years of discussion and debate, but there’s been no comprehensive action on Marcellus Shale issues in Harrisburg.  Now with a series of consensus recommendations from the governor’s Marcellus Shale Advisory Commission in hand, the Pennsylvania Environmental Council (PEC) is calling for a special session this fall.  “We feel that there is now no reason not to enact these changes to the Oil and Gas Act,” says John Walliser, the PEC’s vice president for legal and governmental affairs. 

The Pennsylvania Environmental Council was represented on the 30-member commission, and participated in the unanimous vote in favor of the 96-recommendations.  “If you have the agreement among the different members participating on the report, we think there is every reason to get those enacted as soon as possible,” Walliser says. 

State Rep. Bud George

State Rep. Bud George

Agreeing with the PEC’s call for a special session is State Rep. Camille “Bud” George (D-Clearfield), the minority chairman of the Environmental Resources and Energy Committee.  George says the commission’s recommendations are a good first step, but too vague.  “The commission gives us too many feel-good, unspecific generalities,” George said in an interview with Radio PA.

Rep. George has introduced legislation (HB 1800), which combines environmental protections with a Marcellus Shale severance tax.  It contains a number of recommendations made by the Marcellus Shale Advisory Commission.  “But I make the land and water safeguards stronger,” George says. 

George is proposing a volume-based severance tax, which directs revenues toward local governments, environmental programs and infrastructure repair.  The bill, dubbed ProtectPA, would tax natural gas companies 30-cents per every 1,000 cubic feet of natural gas severed.  It has the support of top House Democrats, but will likely not be considered, because it is a tax. 

“I’m not against the gas people, and I mean that from the bottom of my heart,” George says.  But, the veteran lawmaker adds that his main concern is protecting Pennsylvania’s water.

Governor Tom Corbett has said he would not sign a severance tax, but has left the door open for an impact fee.  The commission’s 137-page report recommends such an impact fee, which would mitigate the impacts caused to local municipalities by natural gas drilling.

Marcellus Shale

Expect “Impact Fee” Debate This Fall

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The governor’s Marcellus Shale Advisory Commission has voted to recommend it, and the industry even endorses it.  “The industry and the Marcellus Shale Coalition has been very clear of its support of an impact fee that’s competitive, that’s styled to address the un-met needs of local governments,” said Marcellus Shale Coalition president Kathryn Klaber. 

Klaber stressed that the Marcellus Shale Coalition supports a “competitive” impact fee, citing a new study of the economic impacts of the booming Marcellus Shale industry.  “What we’re seeing in this study are some very large numbers in terms of economic activity and tax benefits… and we wouldn’t want to change that mix so much that we’d be thwarting the kind of investment that this study highlights.”

joe scarnati, SB 100, marcellus shale

Senate President Pro Tem Joe Scarnati has Already Introduced Impact Fee Legislation

Asked about the prospects of an impact fee on Thursday, Senate President Pro Tem Joe Scarnati (R-Jefferson) said further discussions are needed.  “I’m open to ideas, but certainly I want to see as much driven back to where the drilling activities are.  Impact fee is certainly an appropriate name for what we’re trying to address here,” Scarnati told reporters.  He does acknowledge, however, that it would be difficult to pass an impact fee bill, which doesn’t provide some money for statewide environmental projects. 

While the stars appear to be aligning in favor of an impact fee this fall, not everyone is one board.  “The local impact fee is too narrowly conceived.  There are impacts of natural gas drilling that fall well beyond communities that actually have natural gas wells,” said Sharon Ward, director of the Pennsylvania Budget & Policy Center.  Ward supports a broader severance tax, and so do House Democratic leaders.  They’re backing a new bill that would tax gas producers 30-cents per 1,000 cubic feet of natural gas severed. 

However, Governor Tom Corbett has made it clear that he will not sign a severance tax.  He’s previously left the door open for an impact fee – as long as no money is used for the General Fund – but has not commented publicly on the advisory commission’s recommendations.  The Marcellus Shale Advisory Commission’s final report is expected to be released on Friday.

Industry-Backed Study Details Benefits of Marcellus Shale Boom

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Pennsylvania is now a net exporter of natural gas, and has the potential to account for 17.5-billion cubic feet of natural gas, per day.  President of the Marcellus Shale Coalition, Kathryn Klaber, says that would be one-quarter of the nation’s natural gas production.  The new study, The Pennsylvania Marcellus Natural Gas Industry: Status, Economic Impact, and Future Potential, was conducted by Penn State researchers, and commissioned by the Marcellus Shale Coalition.    

Kathryn Klaber says PA’s shale industry has blown its projections out of the water.  “At the beginning of 2010, it was projected that Pennsylvania would be producing a billion cubic feet equivalent  per day by the end of 2010, and we saw that it was double that.”   

The study also projects that Marcellus Shale development could support 156,000 PA jobs this year, and more than 256,000 PA jobs by 2020.  “Every dollar that’s invested in building one of these wells involves more people to do that work, to run the equipment, and to do everything throughout the supply chain,” Klaber said. 

But, the Pennsylvania Budget and Policy Center contends those jobs numbers are overstated.  “Overall, we welcome the gas industry’s contribution to Pennsylvania’s economy, but with this study, the industry continues to overstate the economic benefits and underestimate the costs of increased drilling in the Marcellus Shale,” PBPC director Sharon Ward said in a statement. 

The study is being released less than a week after the governor’s Marcellus Shale Advisory Commission voted for a series of 96-recommendations, including a local impact fee.  “The industry and the Marcellus Shale Coalition has been very clear of its support of an impact fee that’s competitive, that’s styled to address the unmet needs of local governments,” Klaber said in an interview with Radio PA.

Governor Corbett’s Marcellus Shale Commission Endorses an Impact Fee

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The Governor’s  Marcellus Shale Advisory Commission is recommending an impact fee that directs money to local governments to deal with the effects of drilling. Lt. Governor Jim Cawley, who headed the commission, says it does not recommend what the fee should look like or how it would be distributed. He says they believe that’s a matter that best resides in the legislative process.

Cawley says their charge from Governor Corbett was to determine whether or not there were uncompensated impacts that might require an impact fee.  He says in some cases they found that there are.  He says what that fee what look like is a matter for the administration and legislature to tackle.

Cawley called the report the “end of the beginning.”  He says the document will be a recommendation to the Governor.  No work begins until he says go. A final written version of the report based on Friday’s voting was being prepared to present to the Governor.  It will be made public on July 22nd.

The panel also recommended a new look at the 1961 law regulating gas extraction, to revisit language barring “forced pooling” of Marcellus gas. Patrick Henderson, the governor’s energy executive, says other formations are subject to pooling under that law, including the Utica Shale. Forced pooling could compel a landowner to lease out mineral rights if most of their neighbors have agreed to leases.

The report of the commission comes after a series of meetings that began in late March. The commission also made a number of other recommendations regarding

Lt. Gov. Jim Cawley

Lt. Gov. Jim Cawley

emergency response and economic and workforce development related to the Marcellus Shale boom.  A number of the recommendations will require legislative action.

Marcellus Shale

Marcellus Shale Job Creation Numbers Questioned

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A new report questions the number of jobs created by the Marcellus Shale boom between 2007 and 2010. The “not so mighty Marcellus” might describe the results of their analysis according to Dr. Stephen Hertzenberg, Executive Director of the Keystone Research Center.  He says their review shows less than 10,000 jobs created rather than the 48,000 reported in recent statements and commentaries.

Dr. Hertzenberg says job creation differs from new hires, because you also have to look at quits, firings and retirements.  He says you have to look at both sides of the employment ledger.

Dr. Hertzenberg says the Center is trying to get the record straight because when people have a distorted picture of how many jobs are being created by Marcellus, that’s “a lousy foundation for good policy.” He adds Pennsylvania should develop a Marcellus shale economic development policy that includes training and placement of Pennsylvania workers in Marcellus jobs and invests in industries that supply the natural gas drilling industry.

Kathryn Klaber, Executive Director of the Marcellus Shale Coalition, questions the timing of the report, saying it doesn’t add to the debate.

Klaber says it’s a good thing to be creating these jobs and it makes no sense to be quibbling over the numbers, when there’s widespread agreement that the  numbers are large.

Klaber says there are a lot of different ways to look at these jobs. There are jobs in the core industry; directly in drilling and mid-stream development.  There are thousands more jobs, according to Klaber, in industries that support those jobs through the supply chain.

Klaber says Pennsylvania Department of Labor and Industry statistics show unemployment in the counties with Marcellus Shale development remains below the state average. She says the most important thing “we can do is keep our eye on the ball related to the natural gas industry and what it could mean for the state’s economy.” She says there are incredibly good jobs being created, making it an integral part of a rather sluggish economy.

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.

Capitol Rotunda - Facing House Chamber

Voters Split on Governor Tom Corbett

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A new Quinnipiac Poll finds a split job approval rating (39 – 38) for Governor Tom Corbett.  While 39% is a relatively low job approval number, pollster Tim Malloy says there is some good news: “He is doing far better than his counterparts; Gov. Scott of Florida, Gov. Kasich of Ohio, who are in negative territory.”  A widening gender gap appears to be contributing to Governor Corbett’s lukewarm numbers.  “He’s far more popular with men than he is with women,” says Malloy, “There’s an 18 percentage point difference.”  That gap was just seven points in the April Quinnipiac Poll.  23% of PA voters are still undecided on Governor Corbett.  “It could work for him or against him down the road, but it’s a big number that he would obviously try to solicit and win over,” Malloy tells us.

Today’s poll also finds that by roughly 2 to 1 margins, Pennsylvanians support Marcellus Shale drilling, and a tax on the natural gas drilling companies.  Malloy summed it up by saying, “It is drill baby drill, and it is also tax baby tax.”  As those Marcellus Shale poll numbers were being released, the State Senate Environmental Resources and Energy Committee advanced an amended Marcellus Shale “impact fee” proposal, which would direct revenue to affected counties and municipalities.

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. 

Marcellus Shale Coalition Claims Bias in Local Laws

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    The head of the natural gas industry’s Marcellus Shale Coalition claims that some local municipalities in Pennsylvania are discriminating against drillers by passing local laws aimed at preventing gas well operations. Katheryn Klaber cited laws against drilling within a certain distance from buildings and noise ordinances that in some cases ban nighttime noise increases of 5 decibels. Klaber says that’s a law being violated by crickets.

    Klaber was appearing before Governor Tom Corbett’s Marcellus Shale Advisory Commission when she made the comments, asking for “clarity and consistency” in local ordinances. While non-committal on acknowledging that any local laws violated the state constitution, Lieutenant Governor Jim Cawley, who chairs the committee, said the panel will take a look at the industry’s complaints in greater depth.

    An “impact fee” bill currently before the state Senate would establish a model ordinance for municipalities statewide. Those communities that pass stricter local laws would be excluded from the money raised through the fees, which start at $10,000 per well.

    Governor Tom Corbett established the Marcellus Shale Advisory Commission earlier this year to examine all aspects and impacts of the natural gas industry in Pennsylvania.