PA Environment Digest Blog

Monday, October 3, 2011

Senate Republicans Respond To Governor's Marcellus Shale Proposals

Senate President Pro Tempore Joe Scarnati (R-Jefferson) was pleased to see that Gov. Tom Corbett included an impact fee on Marcellus Shale drilling in his recently announced comprehensive proposal. However, Sen. Scarnati recognizes there are obstacles yet to be overcome as negotiations continue on this highly significant plan.

"It was vital that the Governor weighed in on his recommendations for regulating and overseeing the Marcellus Shale industry," Sen. Scarnati stated. "There seems to be general agreement among all parties involved that there needs to be an impact fee that will not only assist local communities affected by drilling activities, but fund important related statewide environmental programs as well."

Sen. Scarnati expressed a strong willingness to negotiate the various proposals outlined in the Governor's plan with the legislation he proposed six months ago. With that said, Sen. Scarnati believes the final package must include a reasonable fee, increased environmental safety measures and incentives to use natural gas. Also, there will be ongoing discussions with local officials and industry representatives to ensure that there is a balanced approach to zoning so that both sides do not continue to spend resources on legal costs.

"As we move toward ensuring that communities across the Commonwealth are protected from the impacts of drilling, there will be discussion on the percentage that goes to local jurisdictions and what environmental programs will be funded and at what level," Sen. Scarnati added. "The most important thing is that we get some consistency, some confidence, and some reliability that the Commonwealth is moving in a direction that will foster growth in the industry while protecting our water, our neighborhoods, and our roads."

"Negotiations between all parties will continue as we look to pass a final Marcellus Shale measure out of the Senate by the end of October, Sen. Scarnati concluded. "I am confident that the final package will be reflective of our understanding of the need to balance the economic growth of this booming industry with the environmental health and well-being of the citizens of the Commonwealth."

Senate Majority Leader Dominic Pileggi (R-Delaware) issued this statement in response to the Governor's Marcellus Shale proposals:

"The proposal outlined today by Gov. Corbett represents a good starting point for the ongoing discussions on how Pennsylvania should best address the many opportunities and challenges presented by the Marcellus Shale gas formation. It is vital to strike the proper balance between protecting our environment and encouraging economic development. The Governor's proposal touches on the most important issues and gives the General Assembly a clear understanding of how he would prefer to see those issues addressed. Enactment of comprehensive Marcellus Shale legislation this fall remains a top legislative priority for the Senate Republican Caucus."

PEC On Corbett's Marcellus Announcement: Good Start, Waiting For The Details

Paul King, President of the PA Environmental Council, released this statement in response to Gov. Corbett's announcement of Marcellus Shale initiatives today:

"The Governor’s proposal is a good start. But the devil is in the details, which are critical to passing a bill that’s good for the environment and public health.

"We haven’t seen all of the details, so we intend to do everything we can to hold the governor’s feet to the fire as this proposal moves through the General Assembly. And we intend to push for a greater share of the impact fee revenue to be used for addressing cumulative impacts and management of Marcellus Shale activity.

"The Pennsylvania Environmental Council has provided its own proposal for amending the Oil and Gas Act to better manage unconventional shale gas development in Pennsylvania. Many of those recommendations were incorporated into the governor’s Advisory Commission report, but more needs to be done.

"We have a duty to get this right. We commend Gov. Corbett on a good start, and expect that he and the General Assembly will build on this plan and craft legislation that fully protects the people and environment of Pennsylvania.

Growing Greener Coalition Reaction To Corbett Impact Fee Proposal

The Renew Growing Greener Coalition today issued the following statement from Executive Director Andrew Heath in response to Gov. Corbett’s Marcellus Shale impact fee proposal.

“The Coalition is pleased that the Governor has come to realize there should be an impact fee on Marcellus Shale drilling and that he will strengthen certain regulations to protect Pennsylvania’s environment from the dangers of natural gas drilling.

“Moreover, the Coalition is pleased that the Corbett administration is setting aside funds for plugging abandoned wells, a function of the Growing Greener program, which has invested $14.7 million in plugging more than 2,100 wells across the Commonwealth.

“Unfortunately, however, the Governor’s proposal falls short of what is necessary to offset the conservation, recreation and environmental impacts that drilling will have throughout Pennsylvania. Though the Governor says all the revenue should be used for industry-related impacts, he ignores the fact that these impacts extend far beyond local communities.

“Consider that Marcellus development threatens our water quality by causing erosion and sedimentation of our wetlands, creeks and rivers. Moreover, pollution from spills, overflows or illegal dumping could be felt in downstream communities all the way to the Chesapeake Bay and other critical waterways.

“Also consider that loss of access to hundreds of thousands of acres of state game lands, forests and parks – which are some of our most important areas for outdoor recreation including hunting, fishing, camping and hiking – threatens our tourism industry as well as the quality of life for all Pennsylvanians.

“Now that the Governor has made his proposal public, the Coalition looks forward to working with the House and the Senate to ensure funding be allocated to Growing Greener to help offset the impacts of drilling and protect water quality, preserve open space and farmland, and enhance parks, trails and other recreational opportunities.”

Growing Greener is a bipartisan program established in 1999 under Gov. Tom Ridge and later expanded by Governors Schweiker and Rendell. Since its establishment, Growing Greener has created a legacy of success, preserving more than 33,700 acres of Pennsylvania’s family farmland, conserving more than 42,300 acres of threatened open space, adding 26,000 acres to state parks and forests, and restoring over 16,000 acres of abandoned mine lands.

Moreover, Growing Greener has contributed and leveraged billions of dollars to the Pennsylvania economy by helping to boost tourism, create jobs and generate revenue.

Yet despite the program’s accomplishments, funding for Growing Greener projects and grants fell from an average of approximately $150 million per year for the last six years to $27.3 million in the current budget. This is an 82 percent cut at a critical time when the natural gas drilling boom poses significant threats statewide to our water, air and environment.

To date, 230 organizations and groups have announced their support for renewing Growing Greener. In addition, at least 90 Pennsylvania municipalities and 23 counties, representing more than 5 million Pennsylvanians, have passed resolutions urging the Governor and Legislature to renew Growing Greener funding.

The Renew Growing Greener Coalition is the Commonwealth’s largest coalition of conservation, recreation and environmental organizations representing nearly 350 organizations and government entities.

Reaction To Gov. Corbett's Marcellus Proposals

Governor Proposes Letting Counties Assess Gas Well Impact Fee
Corbett Releases Marcellus Shale Oversight, Fee Plan
Corbett Would Let Counties Impose Marcellus Shale Fee
Corbett To Let Counties Set Marcellus Shale Fees
Corbett Announces $40,000/Well Marcellus Shale Impact Fee

Governor Unveils County Drilling Fee, Other Marcellus Shale Proposals

Gov. Tom Corbett today said he agrees with 94 of the 96 recommendations made by his Marcellus Shale Advisory Commission and will be recommending legislation authorizing counties to adopt a drilling fee whose revenue would be split between the state (25 percent) and local governments (75 percent) to offset costs imposed by natural gas development.

The recommendations not adopted by the Governor include: forced pooling, re-writing the authority of local governments to regulate drilling linked to a drilling fee and adding natural gas to Tier II of the Alternative Energy Portfolio Standards.

The Governor's Office did not release legislative language or mention which recommendations would be adopted by legislation, regulation or policy. However, he said about one-third require legislative changes; more than 50 are policy-oriented and can be accomplished within the state agencies.

The legislative priorities outlined today will be submitted to the legislative leadership in the near future. The governor has instructed the relevant Cabinet Secretaries to create implementation plans for the policy-oriented recommendations and to submit them to his office within 30 days.

“This natural resource will fuel our generating plants, heat our homes and power our state’s economic engine for generations to come,” Corbett said. “This growing industry will also provide new career opportunities that will give our children a reason to stay here in Pennsylvania. We are going to do this safely and we’re going to do it right, because energy equals jobs.”

County Drilling Fee

Under the Governor's drilling fee proposal, each of the 39 counties with Marcellus or Utica natural gas shales are authorized to adopt a per well drilling fee of up to $40,000 per well the first year, decreasing to at most $10,000 per well in four years.

A county may provide for a fee credit of up to 30 percent if the driller makes approved investments in natural gas infrastructure, which include setting up natural gas fueling stations or natural gas public transit vehicles.

“Estimates show that this impact fee will bring in about $120 million in the first year, climbing to nearly $200 million within six years,” Corbett said. “As the number of wells grows, so will the revenue. Almost all of the money it brings in will go to benefit the places experiencing the impact.”

A quarter of the fee revenues would be sent to state government for several specific uses:

-- 4.5 percent-- up to $2 million-- to the PA Emergency Management Agency for emergency response planning, training and coordination;

-- 3.75 percent-- up to $2 million-- to the Office of State Fire Commissioner to develop and support first responder activities;

-- 3.75 percent-- up to $2 million-- to the Department of Health for collecting and disseminating information and supporting outreach activities for investigating health complaints related to shale gas development;

-- 7.5 percent-- up to $2 million-- to the Public Utility Commission for inspection and enforcement of pipelines;

-- 10.5 percent-- up to $10 million-- to plug abandoned oil and gas wells and provide for the enforcement of oil and gas programs requirements; and

-- 70 percent and an balance remaining to PennDOT for road and bridge maintenance and repair and transportation infrastructure improvements in counties hosting shale gas development.
Seventy-five percent of the revenues would be retained at the local level and allocated to counties (36 percent), host municipalities (37 percent) and 27 percent to municipalities in shale counties distributed by population and highway miles.

Local governments could use the funding for road and bridge repair, water, stormwater and drinking water systems, reclaiming surface and subsurface water supplies, GIS and other information technology, project to increase the availability of housing to low income residents, delivery of social services including domestic relations, drug and alcohol treatment, job training and counseling, court system costs and conservation districts inspection and oversight of natural gas development.

Other Recommendations

As a part of this proposal, Corbett announced a series of prudent standards related to unconventional drilling, including:

-- Increasing the well setback distance from private water wells from the current 200 feet to 500 feet, and to 1,000 feet from public water systems;

-- Increasing the setback distance for wells near streams, rivers, ponds and other bodies of water from 100 feet to 300 feet;

-- Increasing well bonding from $2,000 up to $10,000;

-- Increasing blanket well bonds from $25,000 up to $250,000;

-- Expanding an unconventional gas operator’s “presumed liability” for impairing water quality from 1,000 feet to 2,500 feet from a gas well, and extending the duration of presumed liability from 6 months after well completion to 12 months;

-- Enabling DEP to take quicker action to revoke or withhold permits for operators who consistently violate rules;

-- Doubling penalties for civil violations from $25,000 to $50,000; and

-- Doubling daily penalties from $1,000 a day to $2,000 a day.

Corbett’s proposal also seeks to help secure energy independence and reduce reliance on foreign oil by developing “Green Corridors” for natural gas vehicles with refueling stations at least every 50 miles and within two miles of key highways; by amending the PA Clean Vehicles Program to include “bi-fuel” vehicles (diesel and natural gas); by helping schools and mass transit systems to convert fleets to natural gas vehicles; by stabilizing electric prices by using natural gas for generating electricity; and by encouraging the development of markets for natural gas and natural gas byproducts, such as within the plastics and petrochemical industries.

A summary of the Governor's proposal is available online. Visit the Marcellus Shale Advisory Commission webpage for a complete copy of the July report.