High-level negotiators are attempting to reach an agreement on competing Marcellus Shale oversight bills that have passed through the Pennsylvania House and Senate.
The competing bills are designed to update the state’s environmental rules and include a variety of provisions relating to local zoning rights, civil penalties for violations, well setbacks, best practices for water storage, casing regulations, liability reform, and fracking chemical disclosure. The most contentious of these provisions, though, may be the size, scope, and allocation of hydraulic fracturing well impact fees.
Large Differences in Impact Fees
The House version of the legislation, H.B. 1950, follows standards proposed by Republican Gov. Tom Corbett. H.B. 1950 would impose $160,000 in impact fees over the 50-year life of an average well. The Senate bill, S.B. 1100 would impose $360,000 during the same span.
The competing bills also differ on how the fees would be distributed. The House version would distribute 75 percent of fee revenue at the local level, with the rest going to the state. The Senate would distribute only 55 percent at the local level, with the rest going to the state.
Another distinction between the two bills is who implements the impact fee. Under the House proposal, counties would be free to choose how they would implement the fee. Proponents argue this method would allow counties to compete with one another and would thereby prevent fee schedules in excess of actual impacts. The state Public Utility Commission would implement and distribute fee payments under the Senate plan.
High Costs of Drilling in PA
Katrina Currie, a policy analyst at the Commonwealth Foundation in Harrisburg, says when constructing an impact fee, the emphasis should be on addressing the industry’s tangible impacts and not on funding pet projects across the state.
A Commonwealth Foundation policy briefing released in late October emphasizes the size of a state’s impact fee is not the only element that should determine the proper level of taxation. The briefing found “it cost 25 percent more to drill a well in Pennsylvania than Texas, a cost of $1 million in additional costs.”
Many Competing Plans
The fee debate generated several different proposals that did not always break down along party lines. Rep. Marguerite Quinn, a Republican representing Doylestown, introduced and sought passage for H.B. 1700, which would have imposed higher fees than either the House or Senate bills.
Quinn’s bill “would gen¬er¬ate $400,000 per well in the first 10 years, which is more than any other fee pro¬posal intro¬duced to date,” Quinn wrote in an editorial in the Philadelphia Inquirer.
“What we’re trying to do is balance a fragile economy with environmental concerns, and that has been further complicated by the fact that we have people look at tax rates or a fee and they’re looking at that in a vacuum instead of looking at that within the entire corporate tax system in Pennsylvania,” Quinn told Environment & Climate News.
Despite the competing proposals, “If [negotiators] are able to come together with something, the will is certainly there to put this to bed,” said Quinn.
John Monaghan ([email protected]) is the legislative specialist for energy and environment issues at the Heartland Institute.
“Marcellus Shale Impact Fee,” Commonwealth Foundation: http://www.commonwealthfoundation.org/research/research_detail.asp?id=1964&utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+CommonwealthFoundation+%28Commonwealth+Foundation%29