Harrisburg, PA, United States (AHN) – Lawmakers in Pennsylvania have reached an agreement on a bill charging companies an “impact fee” for drilling natural gas in the Marcellus Shale, legislation that is expected to be part of Gov. Tom Corbett’s budget address on Tuesday.
Compromise legislation reconciling differences between House Bill 1950 and Senate Bill 1100 is said to have been drafted over the weekend by top legislative aides.
Corbett, a Republican at the end of his first year in office, and the GOP-controlled legislature have not released details on the tentative measure. The Post-Gazette reports that the impact fee would be between $190,000 and $355,000 per drilling well depending on the price of natural gas.
Debate on the legislation centers on whether to tax energy producers for operations in the Marcellus Shale, a massive land formation rich in natural gas reserves that encompasses parts of New York, Pennsylvania and Ohio.
Corbett is against imposing a severance tax for fear of scaring away natural gas companies, which have created 72,000 jobs in the state since 2007.
Democrats and some pundits have argued that drilling companies enjoy exemptions from property taxes on oil and gas reserves, as well as exemption from sales tax on fracking chemicals. They cite other states that have imposed a tax on natural gas producers, such as Texas, which has a 5.5 percent tax, and West Virginia, which levies a 6 percent tax.
“Never mind that every other major gas-drilling state in America has a severance tax, even conservative states such as Texas,” the Patriot-News editorial board said in an op-ed last month. “It is well past time to enact a severance tax. If Republicans want to call it an ‘impact fee,’ so be it.”
Apart from a severance tax, Texas has enacted a law requiring public disclosure of chemicals used for fracking.
“Governor Corbett and the House and Senate majorities… are choosing to enrich a few at the expense of the many citizens who are relying on us to protect their interests,” Democratic state Rep. Phyllis Mundy said in an update to constituents last month.
T. Anthony Iannelli, president and chief executive of the Greater Lehigh Valley Chamber of Commerce, has pointed out that natural gas drillers provided Pennsylvania $1.4 billion in state and local tax revenues in 2009 alone.
Democrats and Republicans also disagree on pre-empting the authority of local governments to regulate drilling. The original House bill proposes “uniformity” in local regulations while giving municipalities the power to enforce ordinances “relating to oil and gas development that do not conflict with existing state or federal law.”
Conservationists led by Pennfuture have warned “the bills’ broad definition of ‘oil and gas operations,’ would result in the invalidation of almost any zoning if the Attorney General found some kind of ‘conflict’ with gas development.” Under the legislation, municipalities will be unable to ban wastewater storage facilities in zoning districts and drilling wells to be located further than 300 feet from a home or school.
The bill would supersede an ordinance prohibiting fracking passed unanimously by the city council of Pittsburgh in November 2010. The ban came five months after a blowout in Clearfield of a well in the Marcellus that spewed natural gas and wastewater, prompting the Federal Aviation Administration to restrict air space around the site. The well, owned by Texas-based EOG Resources, had leaked in the weeks before the blowout.
Republicans contend that their proposal strengthens safety requirements by raising penalties on energy companies in the event of an accident, and increasing distances between an extraction well and natural bodies of water.
State House Speaker Sam Smith has pledged to “enact legislation that properly balances the local impacts on the communities with the needs of the industry.”
Fracking is a method of extracting natural gas by injecting chemicals underground at high pressure to fracture formations of shale and other rocks, releasing trapped gas. The process has been linked to contaminated tap water, watersheds and surrounding air, prompting jurisdictions such as Buffalo, NY, and Pittsburgh, PA, to ban it altogether despite the revenues and jobs it provides.
The Environmental Defense Fund says 78 percent of known chemicals used in the process have been associated with short-term health issues such as rashes, burning eyes, nausea, vomiting and tremors. At least 22 percent of the same chemicals are also associated with long-term effects, such as organ damage and cancer.
Halliburton, which pioneered the drilling method in the 1940s, says fresh water and sand typically account for 99.5 percent of the fluid system used in the process. The company has also released a list of other substances used, including a solution sourced entirely from the food industry called CleanStim.
According to the Delaware Riverkeeper Network, officials in Pennsylvania reported about 11 violations a day by natural gas drillers in 2011, up from six daily in 2010.
The compromise agreement among lawmakers in Harrisburg comes a month after Ohio suspended operations in fluid injection wells in Youngstown Township due to a magnitude 4 earthquake. The quake was the 10th such seismic event in less than a year in the area, prompting conservationists to urge companies to consider seismic risks before choosing drilling locations.