Marcellus Shale Legislation Inadequate, State Sen. Fontana Says

Last week was a busy week for the Legislature. After years of debating, the General Assembly passed Marcellus Shale legislation, which was sent to the Governor and signed into law on Feb. 13. House Bill 1950 (HB 1950) is a complex bill that covers many aspects of the industry.

Marcellus Shale is a deep geologic formation that underlies 54 of Pennsylvania’s 67 counties. Pennsylvania ranks No. 15 among the states in natural gas production; however, it is the only major state with fossil fuel deposits that did not have a severance tax or impact fee. In fact, all 14 states with a greater natural gas production than Pennsylvania have levied a severance tax or a conservation fee, all with a higher tax than what has been proposed for our state. Officials expect the Marcellus Shale drilling to eventually vault Pennsylvania to a place among the top five gas producing states.

Over the years, proponents of the fee say drilling throughout Pennsylvania will create revenue and compensate our citizens for the removal of this resource by creating jobs. In addition, the fee will help offset the costs of new roads and bridges, building, and emergency response needs that accompany growth of the natural gas industry.

Opponents of this fee argue that Pennsylvania is in tough competition against other states for the industry’s investment, and putting an impact fee on this energy resource will have a considerable negative impact on Pennsylvania’s ability to compete with other states.

Under HB 1950, an impact fee will be enacted which will fluctuate depending on the price of natural gas and inflation. The fee will yield between $190,000 and $355,000 per well in the first 15 years. The Pennsylvania Public Utilities Commission will administer the collection of the fee and portions of the funding will be split between local municipalities and statewide impact-related programs.

County governments where unconventional wells are located will have the ability to vote on whether to impose an impact fee. If they chose not to, municipalities in that county could impose the fee if half of the municipalities, or if the municipality representing at least 50 percent of the county’s population, adopts a resolution to impose a fee. Specifically, 60 percent of the revenues from this fee will be split between local governments meaning a portion of revenue given to municipalities hosting drilling, shale counties and municipalities in shale counties, and municipalities including those with and without drilling.

The statewide share will receive 40 percent that will be broken down and go to various programs including: replacement or repair costs associated with locally owned, at-risk deteriorating bridges, acid mine drainage remediation, orphaned or abandoned oil and gas well plugging, development and rehabilitation of greenways, open space, parks and beautification projects, sewage treatment and flood control projects to name a few.

HB 1950 also increases setbacks so that the shale gas wells must be 500 feet from occupied structures and water wells, and 1,000 feet from public drinking water. The Department of Environmental Protection (DEP) will have the authority to revoke or deny permits to “bad actors,” as well as establish regulations protecting the drilling region from chemical or hazardous waste at drilling sites.

Because the General Assembly was unable to reach a consensus on Marcellus Shale legislation and amendments, a conference committee was formed. Appointed onto the committee were three Senators and three House members.    Together, the conference committee negotiated the terms of the final piece of legislation. After a bill comes out of a conference committee, no amendments are allowed to be offered. The General Assembly has to vote the bill as is and a constitutional majority is needed for passage in both chambers.

When it comes to issues before the legislature, especially matters like this that will affect generations to come, I always look to my constituents and their opinions to help guide me in how to vote. HB 1950 passed the Senate on Feb. 7 by a vote of 31-19. Please know I voted against the Marcellus shale legislation for several reasons.

To begin, this legislation restricts local municipalities’ ability to provide zoning regulations over the Industry within their individual municipalities. Local officials need be able to work with residents and make decisions about drilling that best fits the needs of their communities. HB 1950 does not allow them this right.
 
Every resident of my district also deserves clean water, air and land. This bill does not go far enough to ensure we are adequately protecting our environment. This is about future generations and there are not enough restrictions to protect us from the risks associated with drilling and the affect it can have on our environment and the safety of residents.
 
For quite some time, I have advocated for a meaningful impact fee on the Industry. I believe the fee in HB 1950 needed to be higher. Pennsylvania will have the lowest impact fee in our nation and as our Commonwealth struggles with budget cuts across the board, a higher impact fee could have been utilized to fund so many of these essential services. The Marcellus Shale industry has the resources and the citizens of Pennsylvania are not reaping enough of the benefits.
 
Overall, I have stressed the need to balance the support of this promising industry with the responsibility to our citizenry and their safety. Instead, HB 1950, looks out for the priority of the Administration which is big businesses.