2002 court case proved windfall for shale drillers
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Fayette County chief assessor James Hercik in his office at the Fayette County Courthouse in Uniontown.
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Every now and again, Pittsburgh attorney Richard DiSalle hears from people he has never represented or met congratulating him on a case he won way back in 2002.
They should be calling. And there are several hundred million reasons why.
Mr. DiSalle's congratulatory callers and writers are natural gas drillers, producers and wholesalers about to get rich from the state's Marcellus Shale gas reserve, if its potential is realized.
They'll be much richer thanks to Mr. DiSalle's 2002 case in which he represented Pennsylvania's Independent Oil and Gas Association and persuaded the state Supreme Court to ban counties from taxing oil and gas production.
In the final decision written by Chief Justice Stephen A. Zappala Sr. before he retired that year, the court unanimously found that assessors couldn't levy the tax. State law authorizing the taxing of minerals only mentions coal, not oil and gas, the opinion said, even though for most of the last century some counties had taxed all three.
"I hate to be boastful, but they congratulate me for the fact that we had the foresight we had and we dug deep enough to find that there was no language in the law to enforce the tax," said Mr. DiSalle.
The decision, by one projection, could cost the state's counties, municipalities and school districts more than $600 million in property tax revenue from gas production in 2014 alone, when the Marcellus Shale industry will be maturing.
That money -- $407 million of it to schools -- would go to just 35 of the state's 67 counties where there's gas production.
While Gov. Ed Rendell and state legislative leaders have spent much of the last month talking about enacting a severance tax on natural gas, discussions about authorizing a property tax on gas have been muted.
"It has been the forgotten issue. It kind of got swept to the side when the governor said he wanted a severance tax," said James Hercik, chief assessor in Fayette County, which was the county that the oil and gas association sued leading to the Supreme Court decision.
First Published September 29, 2010 12:00 am
