Gas drilling bill clears Senate

Includes impact fee and regulatory rules; state House still debating

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HARRISBURG -- After months of negotiations and bill-drafting, the Senate approved a Marcellus Shale impact fee and regulatory measure Tuesday night, taking a significant step toward tighter oversight of gas drilling and new funds for local governments near well sites.

The late-night 29-20 vote came after both chambers in the General Assembly spent the bulk of their day embroiled in floor debates regarding natural gas drilling policy.

Shortly before that vote, the House amended its own shale bill, bringing it in line with a controversial Senate provision to allow the attorney general to decide whether local zoning rules unnecessarily impede gas drilling.

That provision surfaced earlier this week, in response to concerns about Gov. Tom Corbett's stance that the state, not municipalities, should completely control gas drilling regulation.

While the two chambers now are closer to agreement on how to smooth out the state's patchwork of zoning rules, significant areas of disagreement regarding other aspects of drilling oversight remain to be negotiated.

The Senate bill is the first comprehensive legislation on natural gas drilling to be approved in that chamber since the Marcellus Shale boom began.

The measure would assess a decreasing fee of $50,000 per well annually and strengthen environmental regulations, as well as address local zoning rules.

The bulk of that fee, which would be assessed over the first 20 years that a well produces natural gas, would be split between the state and local levels: 55 percent for counties and municipalities in the Marcellus Shale region, and 45 percent to statewide infrastructure repairs, environmental programs and natural gas use projects.

Democratic senators were unsuccessful in their attempts to tweak how the fee is assessed and how its revenues are distributed, to increase bonding requirements, and to prevent state involvement in local drilling rules.

"The fee provides the needed revenues for the needed issues associated with impacts," replied Senate President Pro Tem Joe Scarnati, the measure's sponsor, to a push from Democratic lawmakers to boost the fee.

His fee would raise $94 million from wells that were producing gas this year, a figure that would rise to $155 million next year and $255 million by 2014.

That did not satisfy Sen. Andrew Dinniman, D-Chester.

"It does hit the sweet spot," he said, referring to Mr. Scarnati's term for the amount of revenue to be raised, "but not for the people of Pennsylvania. It hits the sweet spot for the companies."

Others, such as Sen. Lisa Baker, R-Luzerne, noted the lengthy discussion that has occurred in the General Assembly regarding drilling regulation over the past three years and the urgency to strengthen environmental safeguards.

"We all have had many months to decide what we're against," Ms. Baker said. "Now is the time to decide what we're for."

Across the Rotunda, House Democrats, too, were decrying that chamber's smaller proposed fee as too puny. That assessment would start at $40,000 per well and would be charged for 10 years -- half the length of the Senate's proposed fee.

The House fee also would be imposed at the county level, while the Senate version would have the state Public Utility Commission collect and distribute revenues.

It was the proposed zoning change to match the Senate approach that drew the most ire from House members.

Rep. Jesse White, D-Cecil, said the municipalities in his district have been supportive of drilling but want to weigh in on whether a compressor station may be placed next to certain types of buildings, like schools.

"The solution shouldn't be to cut one side out of the process," Mr. White said. "We're not just taking away local control. We're taking away local accountability."

House Majority Leader Mike Turzai, R-Bradford Woods, defended that provision as a "balanced, commonsense" approach.

Asked about the revised zoning approach following a Tuesday afternoon rally, the governor indicated that he still favors complete state control of drilling regulations.

"I'm happy to see that they're moving along," Mr. Corbett told reporters prior to that Senate vote. "I have concerns with [the zoning portion]. I've expressed my concerns."

The governor, however, was generally optimistic about the prospect of both chambers voting on drilling oversight measures.

The House is expected to vote on its shale bill next week, setting up closed-door negotiations with the Corbett administration as lawmakers approach their final session days next month.

"What it has to do is get everyone sitting down at the table to talk ... but we're finally moving," Mr. Corbett said.

Laura Olson: or 717-787-4254.


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