Shale bill heads to governor
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HARRISBURG -- A sweeping overhaul of the state's gas-drilling regulations, including restrictions on local zoning rules and a new fee on those companies, now awaits Gov. Tom Corbett's signature.
The 174-page bill, which cleared the General Assembly on Wednesday, is the result of years of debate over how much money Marcellus Shale drillers should be required to pay in exchange for extracting the lucrative Pennsylvania resource.
It's not the severance tax sought by Democrats and opposed by the Republican governor. Nor will the impact fee strictly benefit the counties where drilling occurs, as some Republicans preferred.
Instead the final plan is a hybrid of several approaches, under which counties decide whether to impose the fee, a state agency collects the dollars, and a bevy of agencies and programs benefits from the revenue.
"This bill may not be perfect, but we've been waiting for perfect for four years," said state Rep. Dave Reed, R-Indiana. "At some point you have to stop talking about caring for our environment, and you have to get about the business of doing something about it."
The legislation passed the House on Wednesday, 101-90, after having passed the Senate on Tuesday, following a conference committee meeting -- where the negotiated bill got its first public viewing -- the day before.
Mr. Corbett, who has been targeted by drilling opponents for his support from gas companies and favorable view of the industry, quickly commended lawmakers.
"This legislation reaffirms our strong commitment to safe and responsible natural gas development here in Pennsylvania," Mr. Corbett said in a statement, noting that the measure contains some of his Marcellus Shale panel's recommendations.
Environmental groups were divided over the legislation. The Chesapeake Bay Foundation and Pennsylvania Environmental Council called it an acceptable first step. But PennFuture called it "weak" and a "squandered" opportunity.
Shale gas wells in Pennsylvania will be assessed an annual fee, which will be pegged against the price of natural gas and adjusted yearly to reflect changes in the consumer price index.
Beginning in September, companies would pay between $190,000 and $355,000 per well during the first 15 years after the well is drilled.
Democrats decried the fee as too low to cover local impacts and potential legacy costs of the industry. Some noted that Americans for Tax Reform, the national group whose no-tax-hike pledge Mr. Corbett and a handful of lawmakers signed, says the fee actually counts as a tax.
"It does not raise the revenues necessary to make sure the taxpayers are not left holding the bag again," said House Minority Leader Frank Dermody, D-Oakmont, pointing to past cleanup efforts due to irresponsible coal companies.
Others condemned the millions in incentives for companies seeking to locate an ethane cracker or renovate the state's oil refineries. Rep. Jesse White, D-Cecil, called that allocation "a direct cash incentive earmarked for Shell."
Republican supporters countered that the $3 billion projected over the next decade for infrastructure repairs, administrative costs, environmental projects and converting fleet vehicles struck a reasonable balance.
"Either you are for a common-sense balanced approach to the development of the natural gas discovery, or you are just always going to say no," said House Majority Leader Mike Turzai, R-Bradford Woods.
Each county would decide whether to charge the fee, which would be collected by the state Public Utility Commission. If a county decides not to assess the fee -- and thus forfeit its share of local fee dollars -- a majority of municipalities within its borders could override that decision.
The largest ripples from the bill will be felt by local officials, who will be forced to rewrite strict drilling ordinances or find themselves locked in costly legal battles.
Under the new law, municipalities cannot prevent gas drilling in most areas, except for residential areas of a certain density. Rules cannot be more stringent for drilling than for other industrial activities.
Tougher ordinances would be subject to review by the PUC and could cost a town its share of the impact fee dollars.
"Well over 100 municipalities are going to find out that their ordinances have been declared illegal," predicted Myron Arnowitt, state director of Clean Water Action.
Greene County Commissioner Pam Snyder said Wednesday that municipal and county officials there are worried about how the new law will impact their ordinances. "Taking that local control away would be a mistake," she said.
Despite those looming municipal battles, Ms. Snyder spoke positively of the overall bill, which she said will bring much-needed dollars to the county. "We hope that the state will be prompt in distributing the revenues," she said.
In addition to the zoning and fee portions, much of the measure centers on the first comprehensive updates to the state's Oil and Gas Act since Marcellus drilling began eight years ago.
Among other changes, it would boost penalties and bonding amounts, extend setbacks from waterways, and mandate more comprehensive containment procedures for spills. Companies would be required to provide more disclosure of hydraulic fracturing chemicals, as well as provide more notification to nearby landowners prior to drilling.
Rep. Brian Ellis, R-Butler, who introduced the original measure, touted those updated regulations, saying they "clearly will set us apart as the model for other states in our region."
First Published February 9, 2012 12:00 am