Marcellus Shale drilling severance tax

[RyanR]

Here's some of the latest info on where the legislature is at with the Marcellus Shale natural gas drilling severance tax. From TU's statewide legislative liaison it appears that yesterday the debate in the House was kind of a fiasco as procedural rules were ignored or suspended right and left. Some good things happened, like increasing the percentage towards the Growing Greener Fund. Some were not so good though such as the PFBC having their already meager percentage decreased 2/10 below that of the PGC's. As he states the bright side is that at least something is moving forward. It still not too late to contact your senators and tell them what you want.

After several previous tries and five hours of debate, the House tonight voted on legislation-- Senate Bill 1155 (Eichelberger-R-Blair)-- to enact a Marcellus Shale natural gas production severance tax which is expected to generate about $110 million in FY 2010-11 and about $316 million in FY 2011-12. As required by House rules, a final vote on the bill can take place no sooner than tomorrow at 8:30 p.m., unless members decide to suspend the rules.
Thanks to motions by Rep. Kate Harper (R-Montgomery) and Rep. Mario Scavello (R-Monroe), the House voted 154 to 45 on an amendment to more than double the monies going to the Environmental Stewardship (Growing Greener) Fund from the Marcellus Shale natural gas severance tax as originally proposed by some House Democrats.
The House proposal as amended would distribute funds through this formula--
For FY 2010-11, 2011-12 and 2012-13 the first $75 million shall go to: $70 million General Fund, $5 million Department of Labor & Industry for job training and for contracting with community colleges and other institutions of higher education for job training programs.
After the above transfers, the money remaining is to be allocated as follows:
-- 40 percent to General Fund (the original House Democratic proposal was 60 percent);
-- 32 percent to the Environmental Stewardship (Growing Greener) Fund (the original proposal was 12 percent);
-- 16 percent to the Local Government Services Account;
-- 1.6 percent to Hazardous Sites Cleanup Fund;
-- 2.4 percent to Conservation District Fund;
-- 1.6 percent to Game Commission;
-- 1.4 percent to Fish & Boat Commission (the original proposal was 2.4 percent);
-- 1.6 percent to Low Income Home Energy Assistance Program;
-- 1.6 percent to Oil and Gas Environmental Disaster Recovery Account;
-- 0.8 percent to DEP for dam removal, restoration and repair; and
-- (New) 1 percent for the operation and administration of the Environmental Hearing Board.
Most House members expressed disappointment with the contents of the original proposal, but agreed to support the bill to move the process along and help comply with a budget agreement to pass Marcellus Shale severance tax legislation before October 1.

 

[bikerfish]

I think it passed, but where will the money go? some were concerned over the small amount going to environmental concerns, expecially since that's mostly the entire point of the whole thing.
I'm sure some more info will be coming soon

 

[RyanR]

FYI, I provided the breakdown of the tax as it currently stands. It still must go thru the Senate but all the legislators seem committed to their October 1st deadline.

 

[bikerfish]

doh! jeez, right in front of me! ok, I had a couple beers in me!
those numbers look better than the previous one's I've seen, still not great, but better. I'm not wild about so much going to the general fund.

 

[pratt]

thanks for posting this - since drilling is an inevitable reality - the best case scenario for me is that PA can see some benefits...and this looks like it may make that a reality. Wonder if this helps with the state park 'closing' list since one of the beneficiaries of the Growing Greener fund is DCNR? Also, DEP can hopefully boost enforcement with these extra funds...

 

[RyanR]

Got the word from our legislative liaison, the House has passed the bill, so SB1155 moves on to the Senate now. From a waterways protection standpoint it could have been better but the overall 60% Environmental/ 40% General Fund split (that is, after the initial $70 million payout to the General Fund, and $5 million to Dept of Labor & Industry) is ok- the initial House Democratic proposal was for the opposite with 60% to the General Fund. Motions by Representatives Kate Harper(R-Montgomery) and Mario Scavello (R-Monroe) led to the House voting to more than double the amount going to Growing Greener. Time to call your Senators, pushing for 3-4% to got to the PFBC is a good idea (hopefully it might get them up to 2% then.)

 

[reds]

I believe Scarnatti has already said this will never pass because it is too high of a tax for the repubs to accept. That is not meant to be a political statement against a certain party, before anyone jumps down my throat for it.

http://www.pennlive.com/midstate/index.ssf/2010/09/scarnati_says_house_marcellus.html

That is a link to the article concerning his opinion on the tax. I am sure I did that wrong, but i am too busy to fix it.

 

[RyanR]

Scarnatti's a hack IMO. Too high? In comparison with all the other states that have a natural gas drilling severance tax I believe PA's proposed tax is middle of the road. I think he's also one of the chicken little's trying to scare landowners into thinking the drilling company's will leave (for where, the other states that already have a severance tax?)

 

[WildTigerTrout]

Those gas companies are'nt going anywhere tax or no tax. The gas is here if they want it they will pay for it even with a severance tax!

 

[jdaddy]

That's great for the Growing Greener fund! This is a win guys.

 

[RyanR]

jdaddy wrote:
That's great for the Growing Greener fund! This is a win guys.

Not yet. It has to get thru the Senate yet (anybody hear anything? I was at a meeting, didn't see the news) The legislature is supposedly committed to getting it done by October 1 but they faltered on it last year too though. We'll see. Anglers should have been contacting their senators today.

 

[WildTigerTrout]

Well it's Oct 1 anybody hear if the bill got past the Senate?

 

[franklin]

From my short research the tax appears to be about 9 - 10 cents higher per 1000 CF than any other sate. Maybe they aimed high figuring it would get negotiated down a bit with the senate? I'd be willing to trade off some tax for stronger environmental regulations on drillers. There certainly is an upper limit on what the gas companies can pass on to the market. And rest assured it will get passed on.

 

[RyanR]

Pretty sure its a 6% tax. I have the info on it but no time to find it & post it. Heading out the door for the annual PATU membership meeting. Belledonte or bust.

 

[RyanR]

It didn't get passed by the Senate yesterday... still we wait.

 

[franklin]

According to this article it's $0.39 per thousand cubic feet. Several other issues are raised.

http://www.paflyfish.com/modules/newbb/viewtopic.php?topic_id=15643&forum=6

The real tax revenue is out a year or two. It's better to get it right than get it quick. In my business we have a saying, "you want it bad, you get it bad".

 

[jdaddy]

Franklin you link is a link to this thread we are currently in. In another thread I broke down the price per into a %. As I stated in that thread, it is very high now (I believe around 9%) but could quickly become minimal should natural gas prices surge. It will definitively become minimal over time, % wise, even with normal inflation.

Ryan, my assertion that this was a win was in regards to the direction the general fund was going (down) and environmental concerns were going (up). 32% of $300 tax next year would result in $100 of NEW money in the growing greener fund. This doesn't include a few million per year for dam removal, etc.

 

[franklin]

Sorry grabbed the link on the wrong page. I read the bill from here:

http://www.legis.state.pa.us/CFDOCS/Legis/PN/Public/btCheck.cfm?txtType=PDF&sessYr=2009&sessInd=0&billBody=S&billTyp=B&billNbr=1155&pn=2232

Page 24 line 27 says 39 cents per unit which is 1000 cubic feet. There is language to make adjustments annually based on market prices. I didn't check current market prices but the adjustments are based on 7% of market price.


Edit: Based on today's gas price the 39 cents is about 9% of the market price.

 

[RyanR]

Franklin you're right it is higher than what I thought. The original proposal was for somthing more in line with what I thought but the bill that got thru the House was higher and I didn't realize it until I asked about it this weekend.

Took a drive out to elk/natural gas country on Saturday, heard some interesting and alarmist type anti-gas tax commercials during my drive. Also saw my first Pa elk, ended up seeing 3 total and heard my first bugle too.

 

[Maurice]

For those interested in contacting your Senator to encourage passage of this tax, there are only 3 days left. The following is an easy format to get the message to your senator. It is always good to follow up with a phone call.

From PennFuture:

The Senate only has THREE DAYS left to pass a severance tax on natural gas drilling in the Marcellus Shale. ACT NOW OR THE DRILLERS WILL RUN ROUGHSHOD OVER OUR LAND.

The House passed a natural gas extraction tax with a significant portion going to environmental funding and communities forced to “host” drilling. The ball is now in the Senate’s court – but senators are balking at passing a tax.

If the Senate does not act – THE SEVERANCE TAX WILL DIE.

There will be no other opportunity before this legislative session ends. Pennsylvania will remain the only major natural gas state with no tax on drilling, and the gas rush will overwhelm our land, forests and communities.
Email your Senator now to urge his or her support for severance tax legislation. Encourage your friends and family to do the same. WE ARE ALMOST OUT OF TIME – PLEASE ACT NOW.

Sincerely,

Christine Knapp
Director of Outreach
PennFuture