Gas bill: Shale drillers got the better part of the deal
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Pennsylvania already has a love-hate relationship with Marcellus Shale gas drilling. Enthusiasm for the prospect of good jobs and generous payments to property owners who lease their land has been tempered by worries about the prospects for harm to the state's air, water, roads and quality of life.
To handle that duality, the state needed the right combination of taxation and limitation. Regulations passed last week by the Legislature -- dealing with well fees, zoning restrictions and environmental impact -- fail on both counts.
First is the question of taxation, which Mr. Corbett rejected outright. So instead the state will have a fee system, which will require drillers to pay between $190,000 and $355,000 per well during the first 15 years it is active. The governor chose to go this route rather than enact an extraction tax, even though all other drilling states have done so and the industry has not objected to the practice. That was a political calculation, not a decision made in the best interests of the state.
The next problem with the fees is the variation. The rates will fluctuate because, unlike any other tax that we know of, these fees will vary depending on the going price for natural gas. This is a good deal for the drilling companies, but people don't get this kind of flexibility when it comes to the taxes they pay.
The situation is further complicated by the kick-the-can-down-the-road approach that puts the decisions about whether to charge the fees in the hands of the 67 counties -- ostensibly in the spirit of local control. Yet the regulations take local control away from the counties on regulating the drill sites like other industrial activities.
The drilling rules aren't all bad. Penalties for environmental violations are boosted, companies must provide more public disclosure of what chemicals are used in their extraction processes and they must post higher bonds to ensure they'll clean up any damage, for instance.
But the state's complicated relationship with the Marcellus Shale industry is done more harm than good by these long-awaited, long-debated changes in the law.
First Published February 13, 2012 12:00 am
