Thursday, November 17, 2011

House Republicans Send Optional, County-Adopted Drilling Fee Bill To Senate

After more than 15 hours of debate over three days, House Republicans voted 107 to 76 to pass their version of a Marcellus Shale bill-- House Bill 1950 (Ellis-R-Butler)-- which includes an optional, county-adopted drilling fee, transfers from DCNR's Oil and Gas Fund and provisions strengthening environmental protection measures on Marcellus Shale drilling.
This follows action by the Senate Tuesday to pass Senate Bill 1100 (Scarnati-R-Jefferson), their version of Marcellus legislation which includes a uniform, statewide Marcellus Shale drilling fee and a slightly different list of additional environmental protection measures.
Even though both bills were passed almost exclusively by Republicans in both the Senate and House, they are significantly different in fundamental ways, like on the drilling fee, but in many cases the environmental protection provisions overlap.
The Gov. Corbett and members of the Senate and House have all said they want to pass a final bill by the time the General Assembly adjourns for the year on December 14.
Amendments Added
After considering 51 of the more than 100 amendments proposed to the bill, House Republicans cut off debate and more amendments by making a motion for the previous question and voting 105 to 88 to move the bill to Second Consideration.
The motion ended the ability of members to offer amendments to the bill without suspending the rules. Suspending the rules requires a two-thirds vote.
While House Republicans defeated most of the amendments offered to the bill or declared them unconstitutional before a substantive vote, several were approved, including a change to the provision wanted by Gov. Corbett to preempt local regulation of drilling as a land use.
Local Regulation
Rep. Matt Baker (R-Tioga) offered a gut and replace amendment that included only one change in the language. It replaced the blanket preemption of local regulation of drilling sought by Gov. Corbett with an approach used by the Senate in Senate Bill 1100 (Scarnati-R-Jefferson) loosely based on the ACRE Program which offers a process to challenge local ordinances limiting agricultural operations.
The language would allow drilling companies to request the Attorney General to review local ordinances to determine whether the ordinance allows for the reasonable development of oil and gas mineral rights.
Optional Drilling Fee
No changes were made to the optional county-adopted drilling fee advocated by Gov. Corbett and included in House Bill 1950.
If any counties adopt the drilling fee, money raised would be split between the local communities in which the fee is enacted and the Commonwealth, with 25 percent of the revenues going to the state and 75 percent remaining at the local level.
Of the state’s share, 70 percent would be used to fund road and bridge repairs related to well impacts. The remaining 30 percent would be split up among environmental programs, health initiatives and state emergency response activities.
Of the 75 percent of revenues that would go to the local governments, 36 percent would go to the county in which the well is located, 37 percent would go to the municipality in which the well is located, and 27 percent would be distributed to all municipalities within the host county using a formula based on miles of highway and population.
Oil & Gas Fund Transfers
Another provision in House Bill 1950 would transfer funds out of DCNR's Oil and Gas Fund to provide the Environmental Stewardship (Growing Greener) Fund with $1.2 billion over 10 years, but it is the version of Growing Greener as expanded by Gov. Rendell to include alternative energy and economic development projects like parking garages.
These are not the narrowly focused priorities established in the original Growing Greener Program proposed by Gov. Ridge-- mine reclamation, watershed restoration, farmland preservation and wastewater and drinking water projects.
Transfers would also be used to fund county conservation districts, the Hazardous Sites Cleanup Fund and to increase in-lieu of tax payments for state owned land.
Other Amendments
Three amendments by Rep. Bud George (D-Clearfield), Minority Chair of the House Environmental Resources and Energy Committee, which further provides for affect of pre-drilling surveys, another giving residents living between 2,500 to 5,500 feet of a well the right to a pre-drilling survey and a change removing expedited permit reviews through private third-party consultants.
Amendments were added by Rep. John Mahr (R-Allegheny) to make certain reports required by the Oil and Gas Act public records, requiring the soundproofing of compressor stations within 2,500 feet of a dwelling, requiring the drilling fee to be paid whether a Marcellus well is producing or not and several technical amendments.
Another amendment by Rep. Mahr to increase the bonding amount for the reconstruction of roads from $6,000 to $250,000 per mile was defeated 151 to 42.
Amendments by Rep. Tina Pickett (R-Bradford) requiring further notification of landowners and water companies on pre-drilling surveys and two amendments offered by Rep. Dan Moul (R-Adams) creating a $5 million and a $7.5 million natural gas vehicle conversion grant and loan programs funded by the DCNR Oil and Gas Fund for certain transit systems were also adopted.
An amendment offered by Rep. Greg Vitali (D-Delaware) to require DEP to adopt protocols for air contamination emissions was also adopted.
Summary Of Bill
An updated summary and fiscal note on the bill by the House Republican Appropriations Committee is available online. A House Democratic staff summary of the bill is also available.
A summary of the county-optional drilling fee in House Bill 1950 is available online (fee only). The environmental protection provisions in House Bill 1950 mirror the measures the Governor announced in October.
Reaction (Updated)
“This is about private sector job growth and protecting our citizens and our environment, pure and simple,” said House Majority Leader Mike Turzai (R-Allegheny). “The natural gas industry is the fastest-growing industry in the Commonwealth. The legislation passed today is a balanced approach to protecting Pennsylvania’s residents and resources and continuing the growth of this job-creating industry.”
Gov. Corbett thanked members of the House for passing House Bill 1950 saying the bill "promotes job growth, protects the environmental, includes a responsible impact fee and incorporates many of the recommendations of the Marcellus Shale Advisory Commission.
"I look forward to continuing to work with the members of the General Assembly to enact a fair and comprehensive Marcellus Shale package this session," Corbett said.
"Essentially, this bill ensures strong and consistent environmental standards across the state that includes revisions to the Oil and Gas Act through additional well bonding, setbacks, drinking water protections, permit reviews and new standards relating to lighting, noise, odor and security," said Rep. Matt Baker (R-Tioga). "With my amendment, we substantially raised the bar of what we expect of natural gas operators. Pennsylvania has a long and distinguished history of regulating the oil and gas industry. The standards now outlined in House Bill 1950 build upon that history and will help make Pennsylvania a national leader in energy policy, production of natural gas and job creation."
"House Bill 1950 contains significant changes in setbacks and other environmental safeguards," said Rep. Garth Everett (R-Lycoming). "The local government restrictions have been substantially modified and this bill contains funding for environmental programs like Growing Greener and the Environmental Stewardship Fund, in addition to requiring a comprehensive study of the cumulative effects on air quality. I am pleased that this bill keeps the majority of the impact fee in local areas such as ours, rather than having it turn into a state general fund money grab."
"While I am unhappy that the House chose not to consider my legislation that would dedicate funds from Marcellus Shale drilling to education and programs to help those with special needs, this bill remains a solid first step," said Rep. Thomas Murt (R-Montgomery). "I'm pleased that House Bill 1950 gives the Environmental Stewardship Fund a dedicated source of funding. This program has been key to saving park land and open space.
"While this particular impact fee was not my first choice, it marks a very significant step forward in my ongoing effort to ensure the natural gas industry is held responsible and accountable for any impacts it may have on both drilling communities and the environment statewide," said Rep. Kate Harper (R-Montgomery). "The highlight of the legislation by far is that it provides a dedicated, reliable, long-term source of funding for the Environmental Stewardship Fund, also known as Growing Greener.
"As the architect of the Growing Greener II program, I have seen the vast, positive difference that $625 million in funding has made for farmland preservation, open space, parks and recreation, acid mine drainage cleanup and more across the state. Continued funding for this program is absolutely vital to the protection of our environment for future generations."
"This Corbett-Republican tax bill does not force these huge, out-of-state drilling companies to pay their fair share – and it fails to address the many statewide impacts of drilling activity, including environmental threats," said House Democratic Leader Frank Dermody (D-Allegheny). "This bill is more than just a gift to the oil and gas industry – It's a reckless abandonment of our responsibility to protect and defend the welfare of this Commonwealth."
"This bill would benefit only a select few – namely the drilling companies – while leaving the vast majority of Pennsylvanians with zero benefit from the development of this rich natural resource," said Democratic Whip Mike Hanna (D-Clinton). "If we are serious about protecting our environment, then we should enact a robust severance tax, not this sham of a bill."
"This bill is an absolute embarrassment," said Democratic Caucus Chairman Dan Frankel (D-Allegheny). "It has an obscenely low tax rate, inadequate environmental regulations and pitifully low bonding requirements. This is not what Pennsylvanians want. They want a serious bill that protects the interests of Pennsylvanians over the interests of the oil and gas industry."
“There are some good provisions in this bill, including providing some revenue to the Environmental Stewardship Fund, but the bill held improved environmental regulations and funding for environmental programs hostage in return for an embarrassingly low impact fee,” said Jan Jarrett PennFuture President and CEO. “Worse, the fee may vary from county to county, and it takes away the ability of local governments to manage the impact of drilling through local ordinances. Pennsylvanians want – and deserve – better."
“House Bill 1950 reflects recommendations that were carefully and thoughtfully developed by the governor’s Marcellus Shale Advisory Commission after months of research, discussion and input on how to responsibly grow and regulate the industry, and bring jobs, business opportunities and additional revenue to the Commonwealth,” said PA Chamber President and CEO Gene Barr, who served on the commission as vice chairman of its Economic and Workforce Development Subcommittee.
NOTE: This story will be updated as members release press statements.

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