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Senate Delays Marcellus Bill, House Republicans Field Governor's Proposals, Plus

The Senate this week delayed action on bipartisan Marcellus Shale legislation after Senate Republicans and Democrats failed to resolve differences in and between their Caucuses over a drilling fee proposal and suggestions on whether or not to preempt local ordinances regulating drilling.

           This follows action last week to add a laundry list of environmental protection provisions to Senate Bill 1100 (Scarnati-R-Jefferson) in the Senate Appropriations Committee.
            House Republicans meanwhile introduced their own proposal-- House Bill 1950 (Ellis-R-Butler)-- Tuesday and just hours later the 127-page bill was reported out of the House Finance Committee by a vote of 15 to 10-- Republicans in favor, Democrats opposed.
            The bill, which is supported by House Republican Leadership, includes the county-adopted drilling fee proposed by Gov. Corbett and the additional environmental protection measures he announced in his Marcellus Shale proposal in October, including a blanket provision preempting local regulation of drilling as a land use.
            As with the Governor's proposal, the money raised through the optional county drilling fees would be split between the local communities in which the fee is enacted and the Commonwealth, with 25 percent of the revenues going to the state and 75 percent remaining at the local level. 
            Of the state’s share, 70 percent would be used to fund road and bridge repairs related to well impacts. The remaining 30 percent would be split up among environmental programs, health initiatives and state emergency response activities. 
            Of the 75 percent of revenues that would go to the local governments, 36 percent would go to the county in which the well is located, 37 percent would go to the municipality in which the well is located, and 27 percent would be distributed to all municipalities within the host county using a formula based on miles of highway and population.
            This proposal from Rep. Ellis is significantly different from a drilling fee proposal he introduced in June-- House Bill 1715-- which called for a uniform statewide fee starting at $25,000 per well with the proceeds divided between counties, other local governments and school districts hosting Marcellus drilling.
            A provision added to House Bill 1950 would also transfer funds out of DCNR's Oil and Gas Fund to finance the Environmental Stewardship (Growing Greener) Fund as expanded by Gov. Rendell to include alternative energy and economic development projects like parking garages.  It is not the narrowly focused priorities established in the original Growing Greener Program proposed by Gov. Ridge-- mine reclamation, watershed restoration, farmland preservation and wastewater and drinking water projects.
            Transfers would also be used to fund county conservation districts, the Hazardous Sites Cleanup Fund and increase in-lieu of tax payments for state owned land.
            A summary of the bill is available online.
            The Senate has 9 voting days left this year and the House has 12.
            Legislative Reaction
            “This legislation (House Bill 1950) would enact a competitive local option impact fee that would help to protect our environment and deal with the effects of harvesting natural gas without driving good-paying jobs out of our economy,” Rep. Kerry Benninghoff (R-Centre), Majority Chair of the House Finance Committee said. “The majority of people in Pennsylvania want to see us take some action on this issue. Today, we took the first step toward enacting a responsible bill that would benefit all Pennsylvanians.
            “The reality we are dealing with is that we need a plan that can get 102 votes in the House, 26 votes in the Senate and the signature of the governor,” Rep. Benninghoff added. “We passed a responsible, competitive, realistic plan out of committee.” 
            The Minority Chair of the House Finance Committee, Rep. Phyllis Mundy (D-Luzerne) said, "This is an extremely weak, ill-conceived bill. The consequences for local residents could be terrible. Not only do local governments lose local control, but there is little in place to protect residents, the environment and property values. And to make matters worse, the proposed fee is structured to create winners and losers. Unfortunately, Luzerne County would be one of the losers."
            Rep. Mundy said she fears that local governments would be dealing with similar scenarios such as one that happened near her legislative district, where an oil and gas company proposed building a natural gas metering station near the Dallas Area School District campus.
            "A combination of zoning regulations and public outcry prompted the project to be moved further away from the campus. But if this bill becomes law, the drilling industry could dictate to local government where it will do business.
            "The natural gas industry has a large, expensive impact on our Commonwealth, and that's simply not enough. Taxpayers have been footing the bill for the coal industry for years, and that shouldn't happen again with the gas industry."
            Local Government Concerns
            Prior to the Committee meeting, the PA State Association of Township Supervisors sent a letter expressing concerns about the provision related to preempting local ordinances regulating drilling operations--
            "What we do have issues with is Section 3272, Local Ordinances.  This section reads as a complete preemption of all ordinances, regulations, agreements, etc. The Municipalities Planning Code provides local communities with the responsibility to protect the health, safety and welfare of their community.  Responsible land uses with commonsense regulations are a critical component of that mission.  Pennsylvania is too large and diverse for a one size fits all statewide zoning model.  While we agree there are some statewide standards to be met, local judgment on final site determinations must be preserved.
            "As written, it would prevent a municipality from enforcing general ordinances or other regulations that apply to the general population as allowed by other statutes.  To be specific this section as written would prevent a municipality from “bonding roads,” entering into “excessive maintenance agreements,” or establishing “clear sight angles” under the Vehicle Code that all others would have to comply with.  There are many other statutes that provide general authority that municipalities have to follow but would be preempted under this act.  We would suggest that the language be amended to limit the activity or authority of the municipality to the language of the existing law, which limits the preemption to the actual operations of the oil and gas operations.  We have to oppose this section as it is written and are willing to work with you on suitable language."
            Governor's Comments
            In reaction to the House action, Gov. Corbett said, "I applaud House Finance Committee members for moving this important measure. This bill contains many of the provisions contained in our proposal, and I am pleased to see the legislature working toward a final bill."
            The Governor added he looks forward to continued discussions with the General Assembly that will lead to a strong and sensible Marcellus Shale legislative package.
            Marcellus Industry
            The Marcellus Shale Coalition industry group said the House legislation tracks key recommendations made by the Governor's Marcellus Shale Commission report in July, according to Coalition President Kathryn Z. Klaber.
            “Today's action brings the Commonwealth one step closer to a comprehensive and uniform set of statewide environmental and safety standards. The establishment of a predictable framework of heightened health, safety, and environmental protections will benefit all Pennsylvanians, particularly those residing in nearly half of the Commonwealth’s communities in the Marcellus fairway without formal zoning rules.
            “Importantly, House Bill 1950 provides certainty on a number of issues valued by the men and women supporting their families through work in the natural gas industry. This includes the establishment of uniform standards providing for the safe production of natural gas throughout the Commonwealth; environmental enhancements that protect our air, water, and land while continuing historic job creation and economic growth; and the establishment of an impact fee structure that keeps the Commonwealth engaged in healthy competition for capital with other states and regions. 
            “Today’s vote is a key step in an ongoing legislative process, and we look forward to continued discussions with the Governor, Senate leaders, and a variety of stakeholders to further refine these proposals to ensure we maximize the economic, environmental, and energy security benefits of clean-burning natural gas for all Pennsylvanians.”
            NewsClips: Local Officials Upset Over New Shale Bill
                                Local Ordinances At Center of Drilling Regulation Debate
                                House GOP To Stop Municipalities From Regulating Drilling
                                House Republican Measure Preempts Local Drilling Regulation
                                Robinson Township: Oppose House Bill 1950 Shale Bill
                                Gas Well Fee Up To Counties Under House Bill
                                House Shale Bill Draws Ire From Dems
                                House Bill Would Allow Gas Drilling Fees, Regulations
                                PA House Panel Approves Natural Gas Drill Fee
                                County Impact Fee Gets Boost
                                Marcellus Industry Comment On House Fee Bill Action
                                Post-Vote Answers Stay Vague On House Drilling Fee Bill
                                Senate Impact Fee Still Work-In-Progress, Vote Delayed 2 Weeks
                                Senate Deal On Shale Fee Postponed To November
                                Legislature Struggles With Drilling Fees
                                Senate Drilling Bill Talks To Go On
                                Drilling Impact Fee Plan Draws Concern
                                Letter: Corbett Drilling Fee Plan Is Fair, Reasonable
                                Op-Ed: Use Marcellus Shale Royalties Wisely, For Conservation
                                Op-Ed: Keep PA Growing Greener


11/7/2011

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