Impact Fee Debate Will Shift Back to Legislature After Commission’s Report

The final report from Gov. Tom Corbett’s Marcellus Shale Advisory Commission is unlikely to change the Legislature’s battle lines over the creation of a tax or fee structure on natural gas drilling companies operating in Pennsylvania. 

Lt. Gov. Jim Cawley, commission chairman, said the list of nearly 100 recommendations in the commission’s report to be released this week to Corbett will include an impact fee to cover damage caused by the natural gas drilling industry. 

“Our charge from the governor was to determine whether or not there were uncompensated impacts that might require an impact fee, and in some cases, we did find, in fact, that there are,” Cawley said Friday at the commission’s final meeting. 

An impact fee would assess natural gas drilling companies a flat per-well fee, but what the fee might look like--how much it might cost and who gets the revenue--is best left for the governor and Legislature to work out, Cawley said. 

For some lawmakers--particularly those in the southeastern part of the state where no drilling is taking place--the report will do little to stop the push for a statewide revenue stream. 

“If it is clear that the commission did not understand where the southeast is coming from, then the weight of their recommendations will be somewhat less,” said state Rep. Kate Harper, R-Montgomery.

She pointed to the gas pipelines and other infrastructure that cross the southern part of the state, as well as concerns over the cleanliness of drinking water. 

Cawley said the recommendations would leave open the possibility of directing impact fee revenue to the southeast, if “uncompensated impacts” could be identified there. 

During the spring session, Senate Republicans and Democrats in both chambers supported an impact fee, but Corbett promised to veto any proposal before the commission’s final report.

Drew Crompton, chief of staff for Senate President Joe Scarnati, R-Jefferson, said the Legislature appreciated the commission’s efforts and would benefit from the report’s recommendations on various issues, including workforce development, environmental protection, fiscal considerations, emergency management and regulatory processes.

However, when it comes to the impact fee, he said he expects the General Assembly to continue shooting for a statewide revenue distribution. 

“I think there is going to be some independence on the part of the General Assembly about the use of revenue for statewide environmental initiatives,” Crompton said. “We’re not trying to gain the signature of every member of the commission. We only need the signature of the governor.” 

The impact fee proposed by Scarnati would have imposed a $10,000 per-well fee and distributed the revenue to communities that hosted drilling and the state’s conservation districts, which are operated at the county level. The fee proposal was effectively killed before a final Senate vote by Corbett’s promise to veto it. 

General Assembly members from the southeastern part of the state, including Harper, say revenue is needed in parts of the state beyond where the drilling is taking place, but not everyone agrees. House Republican leadership stood with the governor in opposing the impact fee plan in the spring. In trying to determine a course of action for the fall, the House Finance Committee will hold three hearings around the state during the next month to determine the levels of impact being felt by communities. 

State Rep. Kerry Benninghoff, R-Centre, chairman of the committee, said Friday that the revenue from any impact fee should be kept in the local areas where drilling takes place. 

“The majority of the Legislature does not want to see this be a new revenue source for everyone’s mother and brother to tap into,” Benninghoff said. 

He said the commission report would be part of the overall picture but would not determine policy for the state House. 

State Sen. John Yudichak, D-Luzerne, said the state Senate had been working on the impact fee plan for more than two years and was going to continue moving ahead regardless of the commission’s report. 

“I’m not sure how much new ground it is going to cover, and I’m not sure how much detail was given to the severance tax or impact fee,” Yudichak said. “A lot of it is information that we’ve had at our disposal over the last several years.” 

As the commission completes its work, members acknowledged Friday that their recommendations likely would be altered as the Legislature drafts bills. 

“Things are going to get changed,” said Gene Barr, vice president of the Pennsylvania Chamber of Business and Industry and commission member. “The bills that get introduced might be exactly what we’ve recommended, but I guarantee you it will look different when it gets done.”