Compromise bill on Marcellus Shale fees goes to Corbett

HARRISBURG - After nearly four years of debate and false starts, Pennsylvania is one signature away from finally imposing a fee on natural gas extraction from the Marcellus Shale.

The House voted shortly before 4 p.m. Wednesday to approve a compromise plan for a so-called "local impact fee" on drillers. The Senate passed it on Tuesday, and the measure now heads to Gov. Corbett, who helped author the compromise.

"After long negotiations and a lot of hard work, we have reached a consensus on how to address the impacts in the Marcellus Shale regions," Corbett said. "I am very pleased with the cooperative spirit shown by the General Assembly and their staffs while working to resolve this complex issue."

Under the bill, the fee would fluctuate depending on the price of natural gas and, starting in 2013, on the rate of inflation. If the price of natural gas is between $3 and $5, the fee would be $310,000 per well 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. The price now is less than $2.50, according to the U.S. Department of Energy.

The maximum fee a company would pay is $355,000 per well, if gas stays above $6 - and that does not account for inflation. The minimum would be $240,000, not counting inflation.

One of the major sticking points as the legislature has tried to hammer out an agreement on this issue 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 a fee, 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 affected by drilling for things such as infrastructure and public-safety costs. The other 40 percent would go to statewide projects, many of them environmental, including repairs to greenways and recreational trails, protection of open space, and other beautification projects.

Many Democrats have complained that imposing a fee is equivalent to letting big drillers off the hook. Instead, they have advocated a tax - even though Corbett has been steadfast in his opposition to a drilling tax.

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