[PA] Shale Bill Heads to Governor
Corbett hails zoning overhaul and impact fee for gas drillers
Pittsburgh Post-Gazette
9 February 2012
By Laura Olson, Post-Gazette Harrisburg Bureau
HARRISBURG -- A sweeping overhaul of the state's gas-drilling
regulations, including restrictions on local zoning rules and a
new fee on those companies, now awaits Gov. Tom Corbett's
signature.
The 174-page bill, which cleared the General Assembly on
Wednesday, is the result of years of debate over how much money
Marcellus Shale drillers should be required to pay in exchange for
extracting the lucrative Pennsylvania resource.
It's not the severance tax sought by Democrats and opposed by the
Republican governor. Nor will the impact fee strictly benefit the
counties where drilling occurs, as some Republicans preferred.
Instead the final plan is a hybrid of several approaches, under
which counties decide whether to impose the fee, a state agency
collects the dollars, and a bevy of agencies and programs benefits
from the revenue.
"This bill may not be perfect, but we've been waiting for perfect
for four years," said state Rep. Dave Reed, R-Indiana. "At some
point you have to stop talking about caring for our environment,
and you have to get about the business of doing something about
it."
The legislation passed the House on Wednesday, 101-90, after
having passed the Senate on Tuesday, following a conference
committee meeting -- where the negotiated bill got its first
public viewing -- the day before.
Mr. Corbett, who has been targeted by drilling opponents for his
support from gas companies and favorable view of the industry,
quickly commended lawmakers.
"This legislation reaffirms our strong commitment to safe and
responsible natural gas development here in Pennsylvania," Mr.
Corbett said in a statement, noting that the measure contains some
of his Marcellus Shale panel's recommendations.
Environmental groups were divided over the legislation. The
Chesapeake Bay Foundation and Pennsylvania Environmental Council
called it an acceptable first step. But PennFuture called it
"weak" and a "squandered" opportunity.
Shale gas wells in Pennsylvania will be assessed an annual fee,
which will be pegged against the price of natural gas and adjusted
yearly to reflect changes in the consumer price index.
Beginning in September, companies would pay between $190,000 and
$355,000 per well during the first 15 years after the well is
drilled.
Democrats decried the fee as too low to cover local impacts and
potential legacy costs of the industry. Some noted that Americans
for Tax Reform, the national group whose no-tax-hike pledge Mr.
Corbett and a handful of lawmakers signed, says the fee actually
counts as a tax.
"It does not raise the revenues necessary to make sure the
taxpayers are not left holding the bag again," said House Minority
Leader Frank Dermody, D-Oakmont, pointing to past cleanup efforts
due to irresponsible coal companies.
Others condemned the millions in incentives for companies seeking
to locate an ethane cracker or renovate the state's oil
refineries. Rep. Jesse White, D-Cecil, called that allocation "a
direct cash incentive earmarked for Shell."
Republican supporters countered that the $3 billion projected over
the next decade for infrastructure repairs, administrative costs,
environmental projects and converting fleet vehicles struck a
reasonable balance.
"Either you are for a common-sense balanced approach to the
development of the natural gas discovery, or you are just always
going to say no," said House Majority Leader Mike Turzai,
R-Bradford Woods.
Each county would decide whether to charge the fee, which would be
collected by the state Public Utility Commission. If a county
decides not to assess the fee -- and thus forfeit its share of
local fee dollars -- a majority of municipalities within its
borders could override that decision.
The largest ripples from the bill will be felt by local officials,
who will be forced to rewrite strict drilling ordinances or find
themselves locked in costly legal battles.
Under the new law, municipalities cannot prevent gas drilling in
most areas, except for residential areas of a certain density.
Rules cannot be more stringent for drilling than for other
industrial activities.
Tougher ordinances would be subject to review by the PUC and could
cost a town its share of the impact fee dollars.
"Well over 100 municipalities are going to find out that their
ordinances have been declared illegal," predicted Myron Arnowitt,
state director of Clean Water Action.
Greene County Commissioner Pam Snyder said Wednesday that
municipal and county officials there are worried about how the new
law will impact their ordinances. "Taking that local control away
would be a mistake," she said.
Despite those looming municipal battles, Ms. Snyder spoke
positively of the overall bill, which she said will bring
much-needed dollars to the county. "We hope that the state will be
prompt in distributing the revenues," she said.
In addition to the zoning and fee portions, much of the measure
centers on the first comprehensive updates to the state's Oil and
Gas Act since Marcellus drilling began eight years ago.
Among other changes, it would boost penalties and bonding amounts,
extend setbacks from waterways, and mandate more comprehensive
containment procedures for spills. Companies would be required to
provide more disclosure of hydraulic fracturing chemicals, as well
as provide more notification to nearby landowners prior to
drilling.
Rep. Brian Ellis, R-Butler, who introduced the original measure,
touted those updated regulations, saying they "clearly will set us
apart as the model for other states in our region."
Harrisburg Bureau Chief Laura Olson: lolson@post-gazette.com or
717-787-4254.