HARRISBURG - State lawmakers wrapped up a lengthy political battle Wednesday giving final approval to a bill establishing a county-option Marcellus Shale drilling impact fee and state review of local drilling ordinances.
The House voted 101-90 to send the measure to Gov. Tom Corbett, who said he looks forward to signing it. The Senate approved the same bill Tuesday.
The Republican-negotiated measure was blasted by critics as a giveaway to the gas industry and defended by supporters as balancing the needs for job creation and environmental protection created through the Marcellus drilling boom in Northeast Pennsylvania and elsewhere.
So ends a chapter that began when former Gov. Ed Rendell proposed a state severance tax on natural gas production as the Marcellus boom got under way. Taking office a year ago, Corbett declared a severance tax unacceptable and leading Republican senators responded by proposing an impact fee. What emerged out of a House-Senate conference committee earlier this week is a comprehensive bill that also provides for the first major rewrite of environmental laws regulating gas drilling in a quarter-century.
The measure allows counties with active Shale wells to levy fees on drillers to offset the public costs of drilling operations. The measure exempts so-called stripper or low-producing wells "incapable of producing more than 90,000 cubic feet of gas per day during any calendar month."
County commissioners will take the lead in enacting impact fees, but the bill gives municipal officials an avenue to pursue an impact fee if commissioners don't want one. Half of the municipalities in a county could vote to authorize a countywide impact fee in that situation. Commissioners could enact an impact fee starting 60 days after the law takes effect.
Officers of the County Commissioners Association of Pennsylvania said Wednesday the municipal override provision is acceptable to them. The association endorsed the impact fee bill as a way to generate revenue for bridges and roads, emergency management, human services and court costs.
Bradford County Commissioner Mark Smith favors the fee for his county. He said Bradford County needs one to deal with the impact of a drilling boom on prisons, 911 dispatch systems and human services.
"We are still going to be competitive regardless of the impact fee," added Smith.
An analysis by the Democratic House Appropriations Committee estimates the total revenue yield from an impact fee at $178 million the first year increasing to $302 million in the fourth year based on an effective tax rate ranging between 1.4 percent to 2.5 percent.
Rep. Eddie Day Pashinski, D-121, Wilkes-Barre, spoke against the bill in floor debate, saying it offers only crumbs to the public and a smorgasboard to the drillers. The bill lacks provisions requiring the posting of higher bonds by drillers and base-line studies of water quality, he added.
House Minority Leader Frank Dermody, D-33, Allegheny County, said the bill won't prevent a repeat of the anthracite mining legacy of culm dumps, mine fires and acid mine drainage.
House Majority Leader Mike Turzai, R-28, Pittsburgh, said the bill offers a common-sense solution to benefit the public, businesses and landowners receiving gas royalties.
Statewide environmental groups are divided as to whether to accept the bill. PennFuture said the bill provides inadequate protection for water quality while the Growing Greener Coalition welcomed a new revenue source for that state environmental program which has run out of money.
"This legislation gives the Marcellus Shale business community the fiscal and regulatory certainty it wanted," said David Patti, president of the Pennsylvania Business Council.
While the House spent hours debating the bill during two days, there was intense behind-the-scenes efforts to round up the necessary votes to pass the bill. Corbett and Lt. Gov. Jim Cawley were personally involved in the effort Tuesday night.
Key bill provisions include:
- A retroactive impact fee for 2011.
- The impact fee is structured on a sliding scale from $40,000 to $60,000 the first year depending on the price of natural gas and inflation with the fee declining over 15 years.
- The Public Utility Commission will collect the impact fee revenue and distribute the money with 60 percent going to local governments covered under an impact fee ordinance and 40 percent for statewide uses, including Growing Greener, acid mine cleanup, affordable housing needs and rail freight assistance.
- A driller can ask the PUC to determine whether a zoning ordinance is reasonable or not. If the PUC or state courts reject an ordinance, a municipality couldn't collect impact fee revenue unless they changed it.
- Increases notification to nearby property owners of well permit applications from 1,000 feet to 3,000 feet.
- Extends setback distance for wells to 500 feet from existing buildings or water wells.
- Establishes a 1,000-foot setback for a well from a water supply point used by a supplier.
- Extends setback distance for wells to 300 feet from a stream, spring, body of water or wetland greater than one acre.
- Increases the distance and duration of rebuttable presumption for a driller being responsible for pollution of a water supply from 1,000 feet to 2,500 feet and from six months to one year after the completion of a well.
- Increases penalties for criminal violations from up to $300 to up to $1,000.