No Marcellus Shale Fee for 2011

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Another year has nearly come and go, and still Pennsylvania has no Marcellus Shale drilling tax or fee.

To refresh your memory, the state House and Senate seem to be engaged in a game of how low can you go with their competing shale plans.

Last month, the House approved HB 1950, taking Governor Tom Corbett’s approach to a drilling impact fee. It would authorize a county option fee that would collect $160,000 over the 50-year life of an average Marcellus Shale gas well, the equivalent of a 1% rate. Counties would keep 75% of the funds, and the other 25% would be allocated to the Commonwealth for natural gas-related expenses.

The Senate, meanwhile, adopted SB 1100, sponsored by Senator Joseph Scarnati, raising $360,000 over the life of an average well, the equivalent of 2.2%. It splits revenue between local governments and a statewide pool for infrastructure, as well as grants for environmental conservation and drilling-related environmental impacts.

A comparable well in Texas would raise $878,500 — five times more than the Corbett/House plan and nearly two-and-a-half times more than SB 1100. Even an industry-supported drilling tax proposal from August 2010 would collect more than these plans.

Under both the House and Senate bills, drillers will pay less in Pennsylvania than they do in Arkansas, Texas, Wyoming and many other energy-rich states.

Both bills also strengthen environmental protection laws, but do so at the expense of local communities by removing the limited authority currently enjoyed by local governments to appropriately site drilling facilities.

Now fast forward to this week. On Wednesday, the Senate amended the Scarnati plan into HB 1950 and sent it back to the House before adjourning for the rest of 2011.

Before the final vote, a bipartisan group of senators came very close to winning a vote on a key amendment that would have set a drilling fee rate equal to 5.9% over the life of a well, more than double the 2.2% rate in the Senate plan itself. The Senate deadlocked at a 25-25 vote, and when one senator moved to change his vote from a no to a yes to put the amendment over the top, the Senate engaged in some procedural gymnastics to block that effort.

So why did the Senate kick the ball back to the House? StateImpactPA explains:

The move was aimed at setting up a joint conference committee, which will be formed if the lower chamber votes 'no' on the legislation. A committee would streamline the final voting process, if and when House and Senate leaders agree on a compromise between their two fee bills.

As StateImpactPA observes, 2011 seems to be going the way of 2010 and 2009 — "the year will come and go without a comprehensive Marcellus Shale bill being signed into law."


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