The Pennsylvania legislature will soon consider legislation concerning impact fees for hydraulic fracturing for natural gas.
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“When considering the imposition of an impact fee, the emphasis needs to be on the actual ‘impact’ of Marcellus drilling and not based on which holes need to be filled in the state’s budget.
“Many legislators outside of natural gas-producing counties would like to see this money used for seemingly worthy, but completely unrelated, statewide programs. Doing so would unfairly target the industry for greater revenue under the guise of impact remediation.
“Any fee that is levied should be tied to objective metrics that accurately weigh the additional impact caused by hydraulic fracturing and only fund programs directly tied to those impacts.”
“The fact is that the shale gas industry generates a huge amount of revenue that flows into state and federal coffers already in the form of taxes, permit fees, and other revenue streams. Unconventional gas development has been one of the few economic bright spots over the past few years and it’s both foolish and shortsighted to try to squeeze a few more dollars out of the industry under the guise of protecting the environment from non-existent impacts.
“Hydraulic fracturing technology has been in use for more than 60 years. There’s nothing new about it, except that advances in horizontal drilling have made it more practical and cost-effective to use the technique when withdrawing gas from deep shale formations. Attempts to demonize fracking or to claim there is something mysterious about it have no basis in scientific reality.
“Pennsylvania legislators should also note that the USEPA has developed new rules to further regulate the natural gas industry, in terms of both air and water impacts. These rules are scheduled to go into effect early in 2012. Thus, while the safety and environmental record of the natural gas industry is already exemplary, another layer of protections will be added through federal regulation.
“Given all of these factors, it’s hard to see how the state of Pennsylvania can do any good by assessing fees tied to ‘impacts.’ It’s far more likely that the legislature could do economic harm to an industry that has been instrumental in bringing jobs and revenue back to the state.”
“I have been involved in fracking procedures for the release of additional oil for more than half a century with little or no contamination of ground water hundreds or thousands of feet above the oil-bearing formations. No one can seriously expect any contamination from fracking operations used to extract natural gas. A special tax on such operations is nothing more than extortion of money from the energy companies to pad the bank accounts of local and state government.”
“Just as taxes are the prices for government services, impact fees should be limited in scope to reflect the price of impact caused by hydraulic fracturing and not as a way to ‘bring home the bacon.’ Businesses involved in hydraulic fracturing are already paying taxes and as the state sees a growth in economic activity and jobs created by this technology these businesses will pay even more taxes regardless of a new impact fee.
“Any proposal that is not strictly constructed is nothing more than a windfall for lawmakers seeking to increase the size of government or fund for pet projects. When lawmakers try to exploit a few select businesses with higher taxes, taxpayers are often left to foot the bill for this increase in spending down the road.” John Nothdurft
Director of Government Relations
The Heartland Institute
The Heartland Institute is a 27-year-old national nonprofit organization with offices in Chicago, Illinois; Washington, DC; Austin, Texas; Tallahassee, Florida; and Columbus, Ohio. Its mission is to discover, develop, and promote free-market solutions to social and economic problems. For more information, visit our Web site or call 312/377-4000.