A Marcellus Shale agreement in the works...

After months of wrangling behind closed doors, Gov. Corbett and Republicans who hold the majority in both legislative chambers have a tentative agreement on a fee on the extraction of natural gas from the Marcellus Shale.

The so-called “local impact fee,” which could be voted on as early as this week, would fluctuate depending on the price of natural gas and, starting in 2013, on the rate of inflation, according to a summary circulated to Republican senators over the weekend.

For instance, if the price of natural gas is between $3 and $5, the fee would be $310,000 over 15 years.  That fee would be lower if the price of gas falls below $3, and would increase if the price of gas rises above $5 - although it was unclear yesterday what the other rates would be. The price now is under $2.50, according to the U.S. Department of Energy.

“Staff have been working throughout the weekend and will be working [Sunday] in order to have a proposal that we can consider as early as this week,” House Speaker Sam Smith (R., Jefferson) and House Majority Leader Mike Turzai (R., Allegheny) wrote in a letter to members Saturday.

One of the major sticking points in talks over the last few months has been how – and by whom – money raised by the fee would be distributed.

The agreement would allow counties where drilling occurs to decide whether to impose a fee. If a county declines to impose it, then half its municipalities would have the option to force it to do so.

The Pennsylvania Public Utility Commission would collect and distribute the fee, according to the summary of the agreement. Sixty percent of the money would go to areas directly impacted by drilling, for things such as infrastructure and public safety costs; and 40 percent will go to statewide projects, many of them environmental, including repairing greenways and recreational trails and open space and other beautification projects.

Corbett is likely to give more details about the deal in his budget speech on Tuesday.

Many Republicans had felt pressure to strike a deal on an impact fee before then, fearing that budget talks would overtake the urgency to deal with a Shale fee.

How the tentative agreement will fare remains a big question mark. Many Democrats have complained that imposing a fee is equivalent to letting big drillers off the hook. Instead, they have advocated for a tax – even though Corbett has been steadfast in his opposition to a drilling tax.

And there are some Republicans who believe the industry already pays its fair share of taxes and have opposed adding any new levies.


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