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Governor has deep divides to bridge on Marcellus fee

By   /   October 27, 2011  /   6 Comments

Senate hopes to move shale bill early next week
By Eric Boehm | PA Independent
HARRISBURG — Polls show a majority of Pennsylvania residents support a fee or tax assessed against natural gas drilling companies operating in the Marcellus shale region, but a fee may prove difficult to pass with current political divisions among Republicans.

Gov. Tom Corbett and Senate President Joseph Scarnati, R-Jefferson, have laid out divergent plans to assess an impact fee, but negotiations continue over the size and scope of the fee structure and some environmental requirements contained in the bill. 
Corbett prefers a lower fee on drillers, with counties collecting and distributing the revenue, but Scarnati wants a higher fee collected by the state government in the affected area with a portion of the revenue directed to local governments statewide.
The state House remains the question mark — and a big one — in the ongoing debate on the impact fee legislation.
This week, in an interview with PA Independent, state Rep. Scott Hutchinson, R-Venango, chairman of the House Environmental and Energy Committee, said the divisions within the House GOP caucus on Marcellus shale policy run deep. (Click here to read full interview)
“There are many who believe there should be no taxation; there are a large number who believe in the governor’s plan, which is a local option, locally implemented plan,” Hutchinson said.  “And then there are others who … see the Marcellus taxation as a way to get money for other things, which truly moves it far away from the notion of an impact fee.”
At times, the House GOP seems more like a dysfunctional family than a political coalition, as evidenced in the debate over the Marcellus shale impact fee.
Take the following example:
“We have an industry that is not asking for handouts, and is creating far more than a couple thousand jobs, and for some reason, people think they should have a double taxation,” Hutchinson said. “I don’t know if that’s the way to go.”
But state Rep. Thomas Murt, R-Montgomery, is leading a push to use revenue from a natural gas drilling impact fee to fund education and health programs at the state level, as well as local governments statewide.
“I was motivated not only by a desire to make sure our gas drillers pay their fair share, but to make sure this thriving industry contributes to making Pennsylvania a better place,” Murt said this week.
These two men, at least in theory, play for the same team.
And that does not even take into consideration the views of Democrats, who hold the minority in the chamber. For the most part, the caucus is united behind the idea of a much larger impact fee that would fund not only local governments, but state-level initiatives like Growing Greener, an environmental initiative that pays for various green programs.
“I haven’t seen anybody coalesce around a bill over there (in the House) yet,” said Scarnati. “So, we’re taking the lead on a very difficult issue, and I think it is an issue that has to be resolved.”
The heart of the impact fee debate is Corbett’s proposal to have counties assess and collect the fee, which could be set at $40,000 per well or lower. The common thread in the alternatives to the governor’s plan is that the state would collect the revenue.
Hutchinson said the governor’s plan for a county-level fee structure intrigued him, because it would allow local governments to respond to the impacts they felt are not being paid for by the industry.
Earlier this month, Corbett said the county-level assessments were intended to keep dollars from flowing through Harrisburg, where they could be redirected by special interests to causes not directly related to the mitigation of natural gas drilling impacts.
But criticisms of the county fee have been lobbed from all sides.
County-level fee is divisive
This week, the Citizens’ Marcellus Shale Commission, which formed as an alternative to Corbett’s Marcellus Shale Commission, released an 80-page final report calling for a moratorium against natural gas drilling on public lands and a fee collected by the state that would fund local governments and environmental programs statewide. 
The commission included environmental advocates, progressive groups, labor unions and residents. More than 400 people from 48 counties attended the commissions’ meetings, they said.
Dan Surra, a former state representative and co-chairman of the commission, said the county-level fee was a “terrible idea,” because it could result in different policies in every county and would not fund municipalities outside the natural gas drilling areas.
Another factor in Corbett’s decision to base the fee at the county level could be his campaign pledge not to raise taxes or fees.
Americans for Tax Reform, or ATR, the conservative Washington, D.C.-based policy group that backs the “no-tax pledge” signed by Corbett, will not make a decision on the fee until it is signed into law. But Patrick Gleason, the organization’s communications director, said ATR was more likely to look favorably upon a county-assessed fee than a statewide fee, because the counties could enact the fee. 
The County Commissioners Association of Pennsylvania, a local government group, initially expressed “strong reservations” about the idea of collecting the fees at the local level, an opinion shared by several commissioners in the Marcellus shale region. 
However, the organization reversed course last week, saying it would support the locally assessed fee along with other provisions of the governor’s plan. The organization met with Corbett staff and did not elaborate further. 
The Corbett administration's Energy Executive Patrick Henderson said the recommendations from the governor’s commission should guide negotiations on the state’s shale policy.
“They know where the governor stands on those issues,” Corbett's top energy adviser said Tuesday. “I think we’ll find that we have a lot more in common than we disagree with.”