Marcellus Advisory Committee Supports Impact Fees
Pittsburgh Post-Gazette
16 July 2011
By Laura Olson, Angela Couloumbis and Sari Heidenreich
HARRISBURG -- Gov. Tom Corbett's Marcellus Shale Advisory Commission
endorsed a long list of recommendations Friday on how to deal with the
burgeoning drilling industry, including imposing a local impact fee,
not a tax, on the extraction of natural gas.
The 30-member panel also tacitly threw its weight behind the
controversial practice of pooling, which would effectively allow a
drilling company to force a holdout landowner to lease their
below-ground gas rights under certain circumstances.
The commission, dominated by industry officials and members of the
Corbett administration, did not make the recommendations public Friday.
It will do so at the end of next week in its report to Mr. Corbett. But
the panel aired most of its 96 recommendations during its seven-hour
meeting.
After that report hits his desk, Mr. Corbett will decide which of the
suggestions he will push to see implemented, through regulatory changes
and legislation. But the report will undoubtedly provide the blueprint
for policy emanating from Harrisburg on what has arguably become one of
the most hotly debated issues in the Capitol.
"We've covered a lot of ground," said Lt. Gov. Jim Cawley, the
Republican who headed the commission. "One of the most significant
challenges has been separating fact from fiction. The governor wants
recommendations based on science, not on emotion or based on profits."
The committee studied a wide range of areas related to drilling,
looking at its impact on the environment, public health and safety,
economic development and emergency response.
It did so while keeping a keen eye on how to encourage drillers to
remain and grow in Pennsylvania -- which drew criticism from some that
the commission's work was slanted to benefit the industry, which has
donated generously to the campaigns of Corbett and many legislators.
Still, the panel addressed the key question of a drilling fee, though
their response leaves much of the work for the General Assembly this
fall.
The governor, who during his campaign signed a no-tax pledge, has said
he does not support a tax on the industry.
He has indicated, however, that he would consider a local impact fee as
long as the money raised from it was directed to communities where
drilling occurs.
Mr. Corbett had barred the commission from considering a tax, leading
critics to assert that its members were simply handing the governor a
figurative fig leaf as he grapples with how to answer the fee question.
Panel members offered no views on a price tag for that fee, or on how
it should be structured, pointing to lawmakers to take up that debate.
But some on the panel indicated that they would prefer the bulk of the
money generated from it be targeted to help drilling communities. They
ticked off a long list of costs that they said have gone uncompensated
as localities manage strains to their roads, water and sewer
infrastructure, housing, government services and nvironmental resources.
Environmentalists on the panel succeeded in broadening the list to
include using fee proceeds to restore land, wildlife and outdoor
recreation areas.
"The more bullet-points you put on this, the higher the impact fee is
going to have to be," cautioned commission member Jeff Wheeland, a
Lycoming County commissioner. "We're going to discourage the industry
from doing what they're already doing. What else are we going to throw
in here, all-day kindergarten?"
The commission supported one stipulation that has raised some eyebrows
among lawmakers. As under the impact fee proposed by Senate President
Pro Tem Joe Scarnati, it recommended some zoning rule standardization.
Energy Executive Patrick Henderson said the role of reasonable local
regulation should be discussed to balance the right of municipalities
to set zoning rules while not allowing "unreasonable roadblocks" to
drilling.
Mr. Scarnati's proposal would prohibit localities from "exceeding" a
state-crafted zoning ordinance if they are to be eligible for revenue
from a fee. Lawmakers from both parties, however, have shown hesitancy
toward that idea.
On the issue of pooling, the commission recommended the state's
statutes be "modernized" to allow for pooling, as some other states do.
Pooling could occur when most landowners in an area have signed leases
to allow drilling, but a minority have not. A drilling company could
force a holdout into a "drilling unit." The company would not be
allowed access to the surface of the unwilling landowner's property,
but could harvest natural gas from below and pay the landowner
royalties.
Pooling is not allowed in Pennsylvania for wells drilling into the
Marcellus Shale. The industry has said allowing the policy would make
shale drilling more efficient, requiring fewer wellpads to collect the
same amount of natural gas.
Citing property rights issues, top GOP lawmakers and Mr. Corbett have
said they oppose it.
"Private eminent domain, I don't think that's right," the governor said
in April. "I was made aware that it's on the industry's wish list, but
I don't agree. If I see a bill that contains forced pooling, I won't
sign it."
It was one of the issues that caused tension during an otherwise
well-oiled meeting Friday. Some commission members who represent
environmental groups were concerned it would amount to eminent domain
and said it should have received more discussion during prior meetings.
Another issue that caused friction was how to deal with leasing state
forest lands. The environmentalists sought a complete ban on future
drilling there, but were shot down in favor of a promise for "minimal"
surface disturbance.
In other recommendations, the panel voted to double civil penalties for
drillers who do not comply with Department of Environmental Protection
rules; allow the department to suspend or not issue a permit if rules
are not followed; increase the surrounding area for which a driller is
presumed liable for water contamination; encourage setting standards
for construction of private water wells; and provide more notification
for DEP, local officials and neighbors at certain points in the
drilling process.
Those proposals brought praise from some environmental activists,
including Jan Jarrett of PennFuture. She said the environmental
provisions reflect issues that her group has long advocated.
The panel also recommended that the Department of Health oversee
collection of health data on those who live within a mile of drilling
sites; respond to drilling-related health complaints; and research what
potential, if any, drilling practices have to cause human illnesses.
Though next week will bring a final report, Mr. Cawley and others were
quick to say that future reviews of the industry's oversight will be
needed.
"Just as Rome wasn't built in a day, the Marcellus can't be tackled in
120," he quipped.
Laura Olson: lolson@post-gazette.com or 717-787-4254. Sari Heidenreich
is an intern with the Pennsylvania Legislative Correspondents
Association.