Rendell: Drilling Won't Be Stopped
Washington PA Observer Reporter
8 September 2010
Gov. Ed Rendell told more than 50 state, local and county officials,
leaseholders and environmentalists Tuesday that the state Legislature
has four to five weeks to pass a severance tax on natural gas drilled
in Pennsylvania's Marcellus Shale strata.
During an hourlong news conference at Washington's Courthouse Square
office building, the governor was adamant about two issues. He told
protesters outside and repeated during the news conference inside that
he won't support a moratorium on drilling in Pennsylvania, as has been
done in New York state.
"We can't have a moratorium, and we should not have a moratorium," he
said, adding that the economic potential of the Marcellus Shale is too
great.
At the same time, Rendell also said he'll veto any severance tax
proposal that isn't sufficient to provide the necessary environmental
protections for the state's highways and bridges, streams and hunting
grounds.
"I'm not going to sign something that's a giveaway to the (oil and gas)
industry," he said.
"The battleground is the next four to five weeks," Rendell said, adding
that he expects "a fair tax" to handle all protections of the state's
natural resources without chasing away an industry that he said has led
the state in employment opportunities during the current recession.
"I don't want to kill the golden goose," he said.
During the news conference, which also featured comments from state
Department of Environmental Protection Secretary John Hanger and John
Arway, executive director of the state Fish & Boat Commission,
Rendell said he favors enactment of a severance tax based on the one
that West Virginia levies on its Marcellus Shale drillers.
He said that levy is a 5 percent fee on the price of natural gas at the
wellhead and 4.7 cents on every thousand cubic feet of gas produced.
But the Legislature won't be able to deliver what the governor wants -
or any other version of a severance tax - until lawmakers can sort out
the myriad proposals for such a levy, according to state Rep. Tim
Solobay, D-Canonsburg.
When asked how many severance tax proposals are on the table in
Harrisburg, Solobay raised his hands.
"As many as you can count on both hands," he said.
Later, he told reporters that there are so many variables to consider
that it was impossible to say "what the final product will look like."
Solobay said the final version that has the best chance of passing will
be one that considers the necessary environmental protections as well
as language that lets the drilling industry become more efficient.
"If it's just the tax only and nothing else, it's going to be a hard
vote," he said.
When a woman in the audience said she had heard that the gas industry
was writing the tax legislation, Rendell responded, "They can write the
tax, but I'll veto it. They can write any tax they want, but it won't
become law."
Kathryn Klaber, executive director of the Marcellus Shale Coalition,
which represents drillers and suppliers across the state, said while
there has been constant dialogue between the industry and members of
the Legislature, it is clearly the General Assembly's job to pass the
tax.
She said any legislation that is passed needs to be comprehensive,
recognizing the needs of local government, the interests of the
industry, the confidence of the public and the environmental and safety
issues.
"This is the single most important economic story in Pennsylvania in
generations," she said. "It's not just (a tax) to fill a budget hole."
Hanger told the audience that DEP's need is twofold.
The agency wants to protect the state's natural resources while
ensuring that drillers do their work safely, he said.
He noted that in the last two years, the state has issued 4,600 permits
for drilling wells in the Marcellus, with 1,900 wells drilled across
the commonwealth.
"By 2014, Pennsylvania could be producing about 10 percent of the
country's natural gas," Hanger said, arguing that with billions of
investment dollars pouring into the Marcellus drilling industry here
from Norway, Britain, India and Japan, investors shouldn't be surprised
that Pennsylvania wants to levy a severance tax similar to what already
exists in other states.
Rendell noted that over the past year in Washington County, there have
been 413 permits issued and 244 wells drilled.
While stating that natural gas from the Marcellus can be used to power
cars and to generate electricity, Rendell said that beyond its vast
economic potential, "It's American-produced energy."
He said the version of the tax he wants would provide "substantial"
amounts of revenue to a local share for municipalities with Marcellus
drilling and to the DEP and urged local political leaders to contact
their legislators and support it.
But state Rep. Jesse White, D-Cecil, said later Tuesday that
legislators need to be wary of passing severance tax legislation that
may not adequately handle local and environmental needs. He noted that
in June he and other legislators successfully blocked a request from
Rendell that would have put 80 percent of the collected tax into the
state's general fund.
"It has to stay local, and there has to be an environmental element.
There is no reason in the world that money that will ultimately end up
in Washington County needs to go through Philadelphia or Harrisburg,"
White said.
Arway acknowledged that the Fish & Boat Commission was not
well-prepared "for this rush to further develop our natural gas fields.
The Fish and Boat commission staff are trying to do our duty by
reviewing permits and patrolling streams, but it is currently on the
backs of our anglers and boaters.
"Our message is simple. Pass the severance tax, reserve a portion to
support conservation programs and remember that the Fish & Boat
Commission is an important part of conservation."