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Legislature Returns, Marcellus Shale on Radar

The House and Senate both returned to Harrisburg on Tuesday, attempting to tie up several loose ends prior to the start of budget season, which officially kicks off on February 7 with the Governor’s Budget Address.

Senate Pro Tempore Joe Scarnati said that he wants an agreement struck on the Marcellus Shale package before the Governor gives his address, or at the very least prior to the start of budget hearings.  Corbett said that he sees progress on negotiations which were started last year. Administration and legislators have told ERG that there has been resolution on many issues, but some disagreements remain.

Corbett and House GOP leaders want the fees to total $160,000 over a 10-year period per well. The Senate has proposed a fee that starts at $50,000 per well, and over 20 years, comes to $360,000 per well.

ERG was told that a compromise plan could reduce the Senate fee to $260,000 per well over 10 years, and depending on the number of wells drilled, the state could see initial revenues of up to $150 million, according to estimates.

In exchange for an increase in the fee, the Senate would consider allowing the fees to be imposed by counties, something the governor and House had insisted upon. But the Senate is seeking an override option that would allow 50 percent of municipalities in a given county to overrule the county commissioners in the event that the commissioners vote not to impose fees. And the Senate has asked that a state agency – the PUC in current drafts – collect the funds and handle initial disbursements.

The percentages of funds being used for shale region projects, and the amounts distributed to statewide or non-shale region projects are still being considered.  And it is still unknown if the package will tackle the issues of new leases on state forestland, and the higher revenues coming from currently leased state lands. The Corbett Administration has not yet announced its plans for future state land leases for Marcellus Shale drilling.

Another issue remaining on the table is that of the eventual provisions over zoning.  Resolving disputes over local zoning ordinances the natural gas industry believes are unfair is likely to remain under the authority of the attorney general, but other proposals are still being circulated.  ERG would note that similar provisions were included for agricultural and agribusiness operations in the ACRE program.  Under that law, ACRE program, the attorney general has authority to review local ordinances pertaining to agricultural operations and can file a lawsuit to challenge the legality of any ordinance.

Patrick Henderson, the governor’s energy executive, said the governor’s office seeking a “proper balance” on the zoning measure.

“There are a lot of very positive aspects to both HB 1950 and SB 1100. We are seeking to find a proper balance – one that avoids frivolous lawsuits and avoids ordinances which run contrary to state law and infringe on property rights,” Henderson said this week. “We are also seeking legislation that will insist upon high, uniform standards for the drilling industry while respecting the proper role of local governments in the decision making process.”