Four Factors To Watch For As Senate Vote On Impact Fee Nears

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Pennsylvania’s state Capitol

Next week, the state Sen­ate will hold a vote on a nat­ural gas drilling impact fee.

Top Repub­li­cans and Democ­rats are hash­ing out the measure’s final details this week­end, with the goal of intro­duc­ing the new lan­guage in com­mit­tee on Mon­day, and hold­ing a floor vote on Tuesday.

Part one of the bill, cov­er­ing envi­ron­men­tal pro­tec­tion reg­u­la­tions, was unveiled and approved in com­mit­tee ear­lier this week. The actual impact fee lan­guage – how much money energy com­pa­nies will pay for each well, how the fee will be assessed – is still being worked on behind closed doors.

Here are four key fac­tors to watch for next week, when the leg­is­la­tion becomes public:

Who Assesses The Fee?

The plan Gov­er­nor Cor­bett unveiled ear­lier this month was very sim­i­lar to what has become the top impact fee pro­posal in the Gen­eral Assem­bly, Sen­ate Bill 1100. Both Cor­bett and Sen­ate Pres­i­dent Pro Tem Joe Scarnati’s pro­pos­als would charge an ini­tial $40,000-per well annual fee, which would grad­u­ally be reduced to $10,000 over time. (Scar­nati ini­tially put for­ward a production-based fee, but a Sen­ate com­mit­tee amended his mea­sure in June.) When it comes to how coun­ties and munic­i­pal­i­ties would dis­trib­ute rev­enue, the pro­pos­als are identical.

The big dif­fer­ence is who assesses and col­lects the fee. Cor­bett wants the coun­ties, not the state, to impose their own fees. Leg­isla­tive reac­tion to the county-level plan was across-the-board neg­a­tive, but Cor­bett has insisted a local fee is a major fac­tor for him. (A pos­si­ble fac­tor in Corbett’s think­ing: the fact Amer­i­cans for Tax reform views as county-level fee as kosher, but con­sid­ers a state assess­ment a tax increase.) Will the Sen­ate bend to Corbett’s pref­er­ence, or keep Scarnati’s ini­tial state-level col­lec­tion in place.

One barom­e­ter: the County Com­mis­sion­ers Asso­ci­a­tion of Penn­syl­va­nia ini­tially opposed the Cor­bett county-level plan, but changed its posi­tion after CCAP lead­ers dis­cussed the pro­posal with Lieu­tenant Gov­er­nor Jim Caw­ley and Corbett’s Energy Exec­u­tive, Patrick Henderson.

Will Rev­enue Be Avail­able Next Year?

CCAP may be OK with a county-assessed fee, but the group remains con­cerned about one aspect of the Cor­bett proposal’s lan­guage: an annual fee col­lec­tion date of March 1. The late-winter date is fine in 2013 and beyond, but it cre­ates too nar­row a win­dow for coun­ties to draft and approve fee lan­guage in time for next year’s col­lec­tion date. That means no fee money in 2012. CCAP exec­u­tive direc­tor Doug Hill is call­ing for a first-year exemp­tion – lan­guage cre­at­ing a, say, one-time col­lec­tion date of June 1 for 2012. That would give coun­ties enough time to cre­ate a fee sys­tem with­out a rush, but still col­lect money next year.

How Bipar­ti­san Will The Bill Be?

The amend­ment being drafted this week­end is a rar­ity, in that Demo­c­ra­tic and Repub­li­can lead­ers actu­ally are work­ing closely to reach com­pro­mise lan­guage. The sup­port of top Democ­rats is impor­tant for the GOP, because it would likely head off efforts from more lib­eral law­mak­ers to amend the mea­sure into a broader sev­er­ance tax, once the bill reaches the Sen­ate floor.

Gov­er­nor Corbett’s promise to veto any sev­er­ance tax makes it very unlikely a broad tax steer­ing money to the state gov­ern­ment would become law. But view­ing the mat­ter polit­i­cally, most Democ­rats and many Repub­li­cans would have a hard time vot­ing against a sev­er­ance tax amend­ment. That’s because next week’s vote will be the very first time a nat­ural gas tax or fee is brought up on the Sen­ate floor. Given vot­ers’ wide­spread sup­port for some sort of levy on gas extrac­tion, a “no” vote on a sev­er­ance amend­ment would serve law­mak­ers’ 2012 oppo­nents a cam­paign issue on a sil­ver plat­ter – espe­cially for Repub­li­cans rep­re­sent­ing south­east­ern districts.

What Hap­pens In The House?

House Repub­li­cans haven’t been too inter­ested in an impact fee this year. That’s due to a num­ber of fac­tors, includ­ing intra-caucus divi­sions on what sort of tax Repub­li­cans would pre­fer. The PA Inde­pen­dent delved into the GOP squab­bling in a piece this week:

At times, the House GOP seems more like a dys­func­tional fam­ily than a polit­i­cal coali­tion, as evi­denced in the debate over the Mar­cel­lus shale impact fee.

Take the fol­low­ing example:

“We have an indus­try that is not ask­ing for hand­outs, and is cre­at­ing far more than a cou­ple thou­sand jobs, and for some rea­son, peo­ple think they should have a dou­ble tax­a­tion,” Hutchin­son said. “I don’t know if that’s the way to go.”

But state Rep. Thomas Murt, R-Montgomery, is lead­ing a push to use rev­enue from a nat­ural gas drilling impact fee to fund edu­ca­tion and health pro­grams at the state level, as well as local gov­ern­ments statewide.

“I was moti­vated not only by a desire to make sure our gas drillers pay their fair share, but to make sure this thriv­ing indus­try con­tributes to mak­ing Penn­syl­va­nia a bet­ter place,” Murt said this week.

These two men, at least in the­ory, play for the same team.

How quickly will the House act on an impact fee, once it passes the Sen­ate? That depends on a num­ber of fac­tors, includ­ing the amount of pres­sure Gov­er­nor Cor­bett and Sen­ate Repub­li­can lead­ers are will­ing to exert on the House. Cor­bett has made it clear he wants a Mar­cel­lus Shale bill on his desk this year, so you have to imag­ine he and his staffers will be breath­ing down House Major­ity Leader Mike Turzai’s neck, urg­ing swift action on the measure.