2010-09-09 / Front Page

PA Senate GOP Writes Marcellus Shale Tax Bill

By Marc Levy

HARRISBURG, Pa. (AP) – State Senate Republicans have begun drafting legislation for a sweeping overhaul of Pennsylvania’s oil and gas law that includes proposals for a new tax on the extraction of natural gas from the Marcellus Shale formation and limitations on municipal zoning that affects drilling.

Senate President Joe Scarnati said Friday the GOP plan is a sincere effort to keep the pledge Gov. Ed Rendell and lawmakers made in this summer’s budget agreement to enact a severance tax by Oct. 1.

Senate Republicans had been quiet on their plans, while House Democrats had pressed for an extraction tax beginning as far back as last year and proposed tougher environmental laws on drilling earlier this year.

With natural-gas extraction becoming a major new industry in Pennsylvania, Scarnati, R-Jefferson, said it was important to move forward with a comprehensive bill that addresses a tax along with all concerns, including the industry’s.

“I think they certainly hinge on each other,’’ Scarnati said. “All the issues have to be addressed. Some will make it to the goal line, and some won’t, but we have to make an effort.’’

Pennsylvania is the nation’s largest natural gas producing state without a tax on the gas extracted from its bedrock.

The Senate is slated to reconvene Sept. 20. Republican senators hope to present the plan to Democrats soon for passage in this fall’s legislative session, before the Nov. 2 election.

The Republican Party’s gubernatorial nominee, state Attorney General Tom Corbett, opposes any new tax on natural-gas extraction.

Democratic nominee Dan Onorato, Allegheny County’s elected chief executive, supports a tax to raise money for environmental enforcement, maintenance of infrastructure in communities affected by the drilling and the preservation of open space.

Many details of the GOP plan are still being written, and Republicans have sought input from some environmentalist groups, industry officials and local government advocates, said J. Andrew Crompton, an aide to Scarnati.

It includes new rules for a provision called pooling that could be used to force holdout landowners, under certain conditions, to lease their below-ground gas rights.

A pooling law and limitations on municipal zoning ordinances are top priorities of a number of drilling companies.

In addition, the Senate GOP package would introduce state regulation of gas pipelines and an improved state system of disclosure of violations by Marcellus Shale drilling operators.

It also aims to settle a dispute between gas and coal companies, which don’t want drills piercing coal seams, and impose new responsibilities on drilling companies for cleaning up well sites and maintaining local roads that bear their heavy truck traffic.

The package will include a number of environmentalprotection ideas similar to ones already proposed by House Democrats, such as well-site inspection standards, expanded chemical disclosure requirements and new penalties on drillers that break the law.

The House Environmental Resources and Energy Committee approved several Marcellus Shale-related bills earlier this year, but leaders of the House’s Democratic majority have not brought those bills to the floor for votes.

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