The Pennsylvania House and Senate are pushing separate versions of legislation to strengthen environmental rules surrounding drilling in the Marcellus Shale, and to impose a per well impact fee to fund local infrastructure. The Senate approved its version of the bill on November 15; the House was expected to approve its measure the evening of November 17.
Legislative sources say that a proposal could be agreed to before the end of the year, but differences in the versions still need to be ironed out among both chambers and the Governor’s office.
“We’ll have a better idea when the legislative leaders sit down with the Governor’s office on what they can and can’t live with,” said one legislative source. “But approval before the end of the year is a real possibility.”
If lawmakers do reach a compromise, the bill will move in the six legislative days left before the end of the calendar year – December 5,6,7 and 12,13,14.
The major areas of discussion will be over the amount of the impact fees and the authority local governments have over their zoning ordinances. Many drillers, the Governor’s office, and some in the General Assembly prefer preemption of local zoning ordinances to prevent governments from using their zoning laws to ban drilling. The Senate version, however, allows local governments to maintain their zoning ordinances but would give the drillers and landowners the right to appeal to the Attorney General if they contend the zoning is being used exclusively to block drilling.
“It’s a compromise,” another legislative source said. “Not all local governments are happy and not all drillers, but the Senate felt it couldn’t move the bill any other way.”
On the impact fee side, the Senate bill contains a provision that would increase the amount of the fee if the market price for natural gas rises above certain pre-set increments. The governor’s office opposes any adjustment to the fee based on the price of gas.
Overall, the Senate bill would impose a sliding fee of $50,000 per well in the first year of production, with a $10,000 reduction each subsequent year.
According to estimates from the Senate, the fee proposal 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. Over the next five years the fee will yield more than $1 billion dollars.
Approximately 55 percent of the fees generated would go to counties and municipalities in the Marcellus Shale region and 45 percent to statewide infrastructure projects, environmental programs and other projects related to natural gas production.
As of this writing, the House bill would allow counties to impose fees of as much as $160,000 per well over 10 years.