The Pennsylvania House of Representatives' passage of a bill establishing a natural gas severance tax less than 2 weeks before the 2010 Marcellus Summit opens at Pennsylvania State University was a dramatic reminder of the issue's importance in the Keystone State.
The bill, which would impose a 39¢/Mcf levy, passed the House on Sept. 29 by a 104-94 vote. Majority Leader Todd A. Eachus (D-Luzerne) called the action a major step forward. "Working families across Pennsylvania pay their fair share of taxes. It's about time Big Oil and Big Natural Gas do the same," he said.
"This bill will give our environment programs the resources they need to protect our water supply and our land," Eachus said, adding, "It gives communities that are impacted by this industry a financial shot in the arm to help them improve and maintain their roads, bridges, [and] water and sewer systems."
Appropriations Committee Chairman Dwight Evans (D-Philadelphia) said SB 1155's passage was an important first step, but conceded there may be different views. "What's important is that we find common ground," he said. "We need a tax that is competitive with other shale states, but one that has a reasonable rate and reasonable features appropriate for Pennsylvania."
Prospects for further legislative action during the general assembly's special session weren't bright, however. Senate Pres. Pro Tempore Joseph B. Scarnati III (R-Jefferson) said the bill raised too many red flags to come up for a vote there.
No consultationScarnati told reporters, "First and foremost, the process embarked upon by the House did not involve consultation with the Senate to get a final product that hopefully we could get to the goal line.
Senate leaders agree that the state needs to develop a Marcellus gas policy, but the Senate won't consider a tax rate which punishes the industry, Scarnati said.
"Originally, we were going to look at an Arkansas model that we were supporting and a West Virginia rate, which the governor was supporting," he said, adding that what the House adopted was "ridiculous, absolutely ridiculous," and would probably not pass constitutional muster.
Kathryn Z. Klaber, president of the Marcellus Shale Coalition, considered SB 1155 a "misguided, unprecedented tax." It would be the highest among states producing shale gas and not allow producers to reinvest millions of dollars needed for these difficult operations which virtually every other shale gas producing state allows, she said.
"A competitive structured tax that allows for critical capital investment, coupled with smart regulatory and legislative modernizations, is key to ensuring that this historic opportunity is realized in ways that benefit each and every Pennsylvanian," Klaber said.
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