Marcellus Industry, Environmentalists Open to Scarnati Impact Fee Proposal

By Keegan Gibson, Managing Editor

PA Senate Pro Tem Joseph Scarnati (R-Jefferson) today unveiled his much-anticipated Marcellus impact fee proposal. In their first reactions, representatives from the drilling industry and environmental advocates offered tentative support.

Said Kathryn Z. Klaber, president and executive director of the Marcellus Shale Coalition (MSC), in a statement:

“Our industry understands that, while there are tremendous financial opportunities in Marcellus Shale development, there also can be impacts felt by our host communities.  Policy decisions made at the state and local levels of government most certainly have an effect on job creation and the investment of capital needed to develop and maximize the benefits of clean-burning natural gas from the Marcellus.  Pennsylvania has the opportunity to create a sustained and highly-competitive environment for growth of this productive industry, with all of the associated benefits for its residents.  In order to meet this goal together, any local impact fee on Marcellus production must be clear, straightforward, and competitive.

“Through our Guiding Principles, the Marcellus Shale Coalition has made a commitment ‘to being responsible members of the communities in which we work.’  Accordingly, we are open to discussing with the governor’s Marcellus Shale Advisory Commission, and all legislators, proposals that focus on strengthening our partnership with municipal governments, while providing funds to local communities.”

PennFuture, one of the most vocal environmental advocacy groups in Pennsylvania, was positive albeit more tentative.

“We are very pleased that Senator Scarnati has joined the many other state legislators who are advancing serious proposals for a drilling tax or fee,”  said Jan Jarrett, PennFuture’s president and CEO. “Now it’s not a matter of whether there will be a drilling tax; it’s a matter of what the tax will look like. We look forward to working with all to create the best legislation for a robust and broad-based fee or tax that will benefit our environment, our economy, and all Pennsylvanians by making the drillers pay their fair share.”

Jarrett reiterated a view common among environmental groups: that a severance tax to the state’s general fund would help fund statewide conservation programs not necessarily related to Marcellus – a virtual non-starter in Harrisburg’s political climate.

“Senator Scarnati’s plan unfortunately fails to provide vitally necessary environmental protection funding, and does little to benefit the average Pennsylvania taxpayer. If the Scarnati bill becomes law, it would likely signal the end of our extraordinarily successful Growing Greener program – which started under Republican Governor Tom Ridge and has enjoyed widespread bipartisan support,” said Jarrett. “With the funding for Growing Greener almost gone, failing to include it in an impact fee or drilling tax is a golden opportunity lost.”

Scarnati’s plan would assess a $10,000 base fee per well and generate additional revenue based on gas prices. Scarnati said he will introduce his plan as a bill next week, and hopes to pass it into law by June.

Perhaps more than drillers or environmentalists, the biggest test of the proposal is Governor Corbett.

During a conference call with reporters, Scarnati emphasized that he designed his proposal to meet all of the criteria established by the Governor, who has said that he will veto a Marcellus tax but has left the door open to impact fees.

The Corbett administration has yet to respond public to the proposal, but Scarnati said he discussed the plan with the Governor at length on Monday.

“I have a caution light,” he said. “I don’t have a red light, I don’t have a green light.”

Our friends at the Morning Call and the Post-Gazette have further details.

April 28th, 2011 | Posted in Front Page Stories, Harrisburg | No Comments