MSC Statement on the PA House Passed Severance Tax

Senate should consider alternative to House’s uncompetitive approach

Canonsburg, Pa.– This evening, the Pennsylvania House of Representatives passed a massive, uncompetitive new tax on the responsible development of clean-burning natural gas from the Marcellus Shale formation, which has helped create nearly 88,000 jobs in Pennsylvania alone as the state’s unemployment rate continues to remain near double-digits. This massive new tax – 39 cents per mcf of natural gas – represents the nation’s highest among shale gas producing states. In fact, this onerous tax on shale gas production is twice as high as West Virginia’s, currently the nation’s highest.

Equally problematic, this enormous tax does not allow for natural gas producers to recover and reinvest the millions of dollars required to produce shale gas from the Marcellus, as virtually every other major shale gas producing state does. Many members of the House of Representatives voted against this massive tax, recognizing the negative impact it would have on job creation and investment in Pennsylvania.

Kathryn Klaber, president and executive director the Marcellus Shale Coalition (MSC), issued this statement following the vote:

“Votes for this misguided, unprecedented tax that narrowly passed this evening, are votes against job creation and the responsible development of clean-burning domestic natural gas, which is helping to lower energy prices for Pennsylvania consumers and driving down our nation’s dependence on foreign sources of energy.

“We are confident, based on Senator Scarnati’s public comments this evening, that the Senate will remain steadfast in their commitment to realize a competitive climate for growth and prosperity for Pennsylvanians.

“To make certain that Pennsylvania’s economy and workforce remain ahead of the curve in the increasingly competitive global economy requires commonsense solutions that encourage capital investment in the Commonwealth. A competitively structured tax in Pennsylvania, that allows for critical capital reinvestment, coupled with smart regulatory and legislative modernizations, is key to ensuring that this historic opportunity is realized in ways that benefit each and every Pennsylvanian.”

NOTE: In a statement, Rep. Dwight Evans (D-Philadelphia), chairman of the House Appropriations Committee, underscored the fact that “We need a tax that is competitive with other shale states.” Rep. Evans adds: “I also recognize the industry will want to weigh in and argue for a tax with a rate and characteristics that allow for capital recovery, a tax it can support as it does in every other state where drilling occurs. These issues are all negotiable.”