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Corbett Announces $40,000-Per-Well Impact Fee

Scott Detrow / StateImpact Pennsylvania

Governor Corbett tours the Carpenters Training Center in Pittsburgh, before his announcement

More than two months after his Marcellus Shale Advisory Commission laid out a road map for natural gas regulation, Governor Corbett has unveiled a wide-ranging plan to, among other things, impose an impact fee on drillers.
The Corbett fee would be imposed and collected by counties. It would place a $40,000 levy on wells during their first year of production. That number would drop to $30,000, and then $20,000, during the second and third years. From year four through ten, energy companies would pay $10,000 per well.
Where does the money go? The bulk of it would stay at the local level. Corbett wants counties to keep 75 percent of the revenue, which he says could approach $120 million statewide, during the first year of implementation. The county itself would keep 36 percent of that haul, give 37 percent to municipalities hosting wells, and distribute its remaining 27 percent to its townships without natural gas drilling. In terms of who gets what money, this is similar to the plan Senate President Pro Tem Joe Scarnati announced in May.

Scott Detrow / StateImpact Pennsylvania

Corbett shakes hands before his announcement

The rest of the money – $30 million, based on that $125 million projection – would go to the state. PennDOT would receive the bulk of the cash, for use on infrastructure repairs in drilling counties. PEMA, the State Fire Commissioner, Department of Health and Public Utility Commission would each receive shares of less than ten percent, and the Department of Environmental Protection would take a 10.5 percent cut.
If you’re wondering how money assessed to a company and then delivered to the state isn’t a tax, Corbett has an answer for you. “It’s a fee. It’s a fee to operate,” he said, arguing a set amount of money charged to offset a state obligation or service falls into fee, not tax territory. “Does a state suffer an impact? Absolutely,” he said. “There’s certainly an impact to PEMA…there’s certainly an impact to DEP. There is an impact to the roads and bridges in those areas covering Marcellus. …None of this money is going into the General Fund.”
But even as a fee, the proposal appears to contradict a promise Corbett made during last year’s gubernatorial campaign. “No increased taxes. No fees, at this point,” he said during the October 16th debate. “We’re not going to increase fees.” Pressed on that point today, Corbett said there’s a difference between increasing a fee, and creating a new one. “This isn’t even an increase,” he argued.
While Corbett’s impact fee proposal certainly takes top billing, the governor’s proposal has two other components: increased environmental regulations, and economic incentives aimed at growing the retail and consumption side of the natural gas industry. Corbett wants to grow the industry, but do it safely. ““I have a new equation that I like to refer to. Energy equals jobs. And we sit on top of energy.”
The governor wants to increase the minimum distance between a gas well and streams, rivers, or private water supplies. He also wants to up the amount of money drillers pay to bond their wells, and double penalties for civil violations, from $25,000 to $50,000. Another major proposed change would be to increase the “presumed liability” for drillers from 1,000 feet to 2,500 feet. That means if a person lives within 2,500 feet of a drilling site, and his or her water supply goes bad, the energy company would assume the legal liability for the problem.
Finally, the incentives: Corbett wants to set up “green corridors” throughout Pennsylvania, with natural gas fueling stations every 50 miles. It’s unclear how he’d fund this effort, though part of the money would come from incentives his plan offers drillers. Energy companies could reduce their fee payment by up to 30 percent, by “[making] improved investments in natural gas infrastructure.” That includes “setting up natural gas dueling stations or natural gas public transit vehicles,” according to Corbett’s press release.
We’ll have much more on the proposal, including reaction from lawmakers and a timetable of what happens next, later today.

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