Corbett panel's report backs impact fee on Marcellus Shale drilling

HARRISBURG - Gov. Corbett's advisory panel on drilling in the Marcellus Shale endorsed a long list of recommendations Friday on how to deal with the burgeoning industry, including imposing a local impact fee - not a tax - on the extraction of natural gas.

The 30-member commission also tacitly threw its weight behind the controversial practice of "pooling," which effectively allows a drilling company to force holdout landowners to lease their below-ground gas rights under certain circumstances.

On the long-debated issue of an impact fee, the commission did not offer dollar amounts or other specifics on what such a fee should look like and how it should be structured, saying those questions were best left to the legislature.

The panel, numerically dominated by industry officials and members of the Corbett administration, did not make its written recommendations public but promised to do so at the end of next week in a report to the governor. Still, it aired the gist of most of those recommendations during Friday's seven-hour meeting.

The ideas now go to Corbett, who will ultimately decide which ones he will push to see implemented, either through regulatory changes or legislation. But the report is sure to provide a blueprint for policies emanating from Harrisburg on what has 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 final report was approved unanimously, though votes on some individual recommendations were not.

The panel studied a range of issues related to drilling, from its impact on the environment, public health, and safety to economic development and emergency response. All the while, commissioners kept a keen eye on how to encourage drillers to stay in Pennsylvania and grow their companies here - which drew accusations from some quarters that the commission's work was slanted to benefit an industry whose executives donated generously to the campaigns of Corbett and many legislators.

Still, two conservationists on the panel offered guarded support afterward for the outcome. Ronald Ramsey, a senior policy adviser at the Nature Conservancy, said he did not endorse all 94 recommendations but was "very happy with the progress . . . on a number of critical environmental issues."

Panelist Cynthia Carrow, vice president of government relations at the Western Pennsylvania Conservancy, said, "We were not successful on a few of our priorities, but I am pleased that we made good progress on a lot of environmental protections around the development of natural gas."

For all its importance in the long-running debate over whether to tax drillers, the panel's call for an impact fee was not unexpected.

Corbett, who during his 2010 campaign signed a no-tax pledge, has steadfastly opposed a tax on the industry and barred the panel from considering such a tax. He has said, however, that he would consider a local-impact fee as long as the revenues were directed to communities where drilling occurred.

Some panelists said they, too, wanted the bulk of the money generated by such a fee to be very locally targeted: To help communities pay the cost of drilling-related damage done to roads, water, and sewer infrastructure, as well as for added housing costs brought on by the influx of drilling crews.

Environmentalists on the panel pushed, and succeeded, to broaden that list to include restoration of 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," said commission member Jeff Wheeland, a Lycoming County commissioner. "What else are we going to throw in here, all-day kindergarten?"

On the issue of pooling, the commission recommended that state laws be "modernized" to allow it, as some states do.

Pooling happens when most landowners in an area have signed leases to allow drilling, but a minority have not. If pooling is allowed, drillers are barred from access to the surface of a holdout landowner's property, but can take the gas below and pay the landowner royalties.

The practice is not allowed for drilling in the Marcellus Shale. Corbett, citing property-rights issues, opposes pooling. The industry has said the practice would make drilling more efficient by requiring fewer wells to collect the same amount of natural gas.

Pooling was one of the few topics that caused tension Friday in what was an otherwise orderly meeting of a commission whose first public session in the spring was interrupted by protesters. Another bone of contention was how to deal with leasing of state forest lands to gas drillers. The environmentalists wanted to make it very difficult to drill there, but were thwarted by majority votes.

In other recommendations, the panel voted in favor of doubling civil penalties for drillers who do not comply with Department of Environmental Protection (DEP) rules; allowing that department to suspend a permit if rules are not followed; increasing the surrounding area for which a driller is presumed liable for water contamination; and requiring more notification for DEP, local officials, and neighbors at certain points in the drilling process.

The panel also recommended that the state Department of Health oversee collection of health data on those who live within a mile of drilling sites; research what potential, if any, drilling practices may have to cause human illnesses; and then educate health-care providers on these ailments.