Tentative deal on Pennsylvania shale-gas fee

Gov. Corbett may reveal details of the deal Tuesday.
Gov. Corbett may reveal details of the deal Tuesday.
Posted: February 06, 2012

HARRISBURG - After months of wrangling behind closed doors, Gov. Corbett and Republicans who hold the majority in both legislative chambers have reached a tentative agreement to impose a fee on the extraction of natural gas from the Marcellus Shale.

The so-called "local impact fee," which could be voted on as early as this week, would fluctuate depending on the price of natural gas and, starting in 2013, on the rate of inflation, according to a summary circulated to Republican senators during the weekend.

For instance, 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.

"Staff have been working throughout the weekend and will be working [Sunday] in order to have a proposal that we can consider as early as this week," House Speaker Sam Smith (R., Jefferson) and House Majority Leader Mike Turzai (R., Allegheny) wrote in a letter to members Saturday.

According to an analysis circulated by Democrats in the House, 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 in talks over the last few months 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.

Corbett is likely to provide more details about the deal - if it sticks - in his budget speech Tuesday.

Many Republicans had felt pressure to strike a deal on an impact fee before then, fearing budget talks would overtake the urgency to deal with a Marcellus fee.

How the tentative agreement will fare remains a question mark. 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.


Contact staff writer Angela Couloumbis at 717-787-5934, acouloumbis@phillynews.com, or @AngelasInk on Twitter.

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