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Environment & Energy

Stack Proposes Marcellus Shale Severance Tax

Another Marcellus Shale drilling policy, which includes a 5 percent severance tax, is being proposed by a Philadelphia lawmaker.

State Sen. Mike Stack (D-Philadelphia) announced last week that his legislation would impose an extraction tax which would overlap the existing impact fee, a policy that mirrors West Virginia law. The Corbett administration and Republican-controlled Legislature have resisted a severance tax.

Citing a report by Reuters, Stack said Pennsylvania stands to lose more than $20 billion over the next 20 years if a severance tax is not adopted.

“We can be a pro-development, pro-industry state, yet, we need to be one that protects the natural environment, that protects people who are concerned, who want answers, who feel like there’s no accountability or openness — so, we need to do a better job,” he said.

Under the proposed bill, revenue raised by the severance tax would go towards funding education, environmental protection and economic revitalization.

Stack said quality education needs to come before natural gas extraction.

“I think it’s outrageous what we have going on in Pennsylvania where the first thing that gets cut in our budget is public education,” he said. “We talk about what a valuable resource the Marcellus Shale is. A far more valuable natural resource is our young people; our children.”

The bill would also enact a $3 million impact fee for gas wells drilled on state forest land or state parks, require gas drillers to pay twice the property value if a landowner’s private well is contaminated, and create an easy-to-use DEP website that lists all the chemicals present at gas well operations.

Stack said there needs to be more transparency when it comes to the drilling process.

“It’s baffling to me that this is information that’s tough for people to get,” he said.”

The bill would also create an ombudsman office in charge of investigating all Marcellus Shale-related complaints made by landowners and community members.

Stack's legislation is the latest proposal by various Democratic lawmakers to enact a severance tax.  None have gotten out of committee.  But now some GOP members are indicating a willingness to explore the possibility.

Sen. Jake Corman (R-Centre), who chairs the  Appropriations Committee, told The Associated Press a severance tax might be a “more serious discussion” this year.

But he said the structural problems in the budget would remain, even with such a tax.

“Anyone who’s projecting a severance tax or any other revenue or tax that would solve this structural problem we have in our budget is naïve or misinformed,” Corman said.  He said other issues take priority including the rising costs of health care and pensions.

“If we don’t, you’re talking about an increase of $2 billion every year, and a severance tax is $500 million,” Corman said. “That buys you a quarter of a year. That doesn’t solve the problem.”

The four Democratic gubernatorial candidates have each proposed a severance tax on shale gas.