Pa. chambers must resolve shale-tax bills

HARRISBURG - The state House's approval Thursday of a sweeping bill to regulate Pennsylvania's booming natural-gas drilling and impose a fee on the industry sets the stage for potentially difficult negotiations with the Senate.

The Republican-sponsored bill passed the House, 107-76, after three days of debate. On Tuesday, the Senate passed its own bill, which calls for an impact fee on the growing Marcellus Shale industry and an updating of state laws that never envisioned such deep, horizontal drilling, which also produces polluted wastewater.

But the Republican-controlled chambers must resolve a variety of conflicts between the bills, which may not be easy.

"It will take an enormous effort to resolve all the disparities by the end of the year," said Drew Crompton, a top aide to Senate President Pro Tempore Joe Scarnati, who authored the Senate bill.

First and foremost will be how a fee on each Marcellus Shale well is imposed, as well as the amount. The House bill closely parallels Gov. Corbett's proposal to allow counties to decide whether to levy an impact fee of up to $160,000 over 10 years. The Senate bill automatically imposes a fee of $360,000 over 20 years, or approximately 3 percent of the expected value of production.

Also, the competing bills offer different formulas for distributing the money.

The Senate bill would send 55 percent of the fee revenue to drilling communities and 45 percent to the state for environmental cleanup, bridge improvements, sewage-treatment systems, open-space expansion, and other purposes.

The House bill, however, would send 25 percent to the state for transportation improvements, emergency response, and other purposes.

It would also increase the required distance between gas wells and water sources such as reservoirs and water wells, but not to the extent that Democrats and environmental groups sought. Industry groups generally support the House bill, which drew "yes" votes from 103 Republicans and just four Democrats.

The bill also proposes using tens of millions of dollars in royalties each year from drilling on state-owned forestland as grants to help mass-transit agencies buy natural-gas powered buses and pay for environmental-improvement programs and subsidies for local governments that are home to forestland.

In a statement, Corbett called the bill a "strong Marcellus Shale package, which promotes job growth, protects the environment and includes a responsible impact fee." He noted that it included many recommendations from his Marcellus Shale Advisory Commission, which was dominated by people from his administration and the industry.

Democrats derided the House bill as lacking strong environmental protections and giving the state's natural resources away to a lucrative industry without extracting a meaningful tax.