Update on PA Severance Tax Bill – More Progress, House Leaves Town

We have a brief respite, but are still in a dangerous position. The Pennsylvania House continued to debate and vote on amendments to House Bill (HB) 1401 yesterday–the Frankenstein bill introduced by RINOsaur Gene DiGirolamo (“Republican” from the Philadelphia area) that would tack a 3.2% severance tax on top of the existing ~5% impact tax (called a “fee”) already levied on Marcellus drillers, thereby effectively killing any new Marcellus drilling in the state (see PA Frankenstein House Bill Merges Severance Tax & Minimum Royalty). Debate on the bill began Monday, making quick progress (see Disastrous PA Severance Tax Bill Debated in House, Makes Progress). More progress was made yesterday. Some amendments to the bill passed, some failed–and then the House “abruptly adjourned” late last night without voting on the full bill itself. They got outta Dodge. The House returns to Harrisburg for more voting on Dec. 4th, so we have nearly two weeks of a reprieve before the battle begins again. It is vital this bill NOT PASS–for the future of Marcellus drilling in PA. Below is a list of the amendments that have, so far, passed and not passed, and how they tweak and change the overall Marcellus-killing HB 1401 bill…

Once again the PA Environment Digest blog site does a bang-up job of covering the details as this bill works its way through the process:

After two days of debate and considering 20 or so amendments to House Bill 1401 (DiGirolamo-R-Bucks) imposing a natural gas severance tax, the House abruptly adjourned Tuesday night without finishing work on the bill.

Before leaving, the House considered amendments to the bill most of which were voted down by very slim margins.  These are the amendments that got in–

  •  Moving To Title 58: A4529 (Maher-R-Allegheny) voted 191 to 2 to amend the bill to move the existing language from the Tax Code to Title 58 relating to Oil and Gas. As a result, a significant number of amendments were no longer germane to the bill and were out of  
  • Deemed Approved Oil & Gas Permits: A4214 (Benninghoff-R-Mifflin) , on the second try, adopted a new provision 97 to 95 that declares oil and gas well-related permits deemed approved if DEP did not finish their review by the deadlines imposed by existing law by a vote of 97 to 95. This was one of the environmental  riders in the original Senate-passed budget package agreed to by the Senate and the Wolf Administration.
  • Freeze On Oil & Gas Permit Fees: A4208 (Cutler-R-Lancaster) voted 100 to 93 to freeze existing unconventional well permit fees through January 1, 2021 (4 years). DEP is now working on a proposal to increase the fees to pay for Oil and Gas Program regulatory costs.
  • Reallocation Of Revenue: A4424 (Lawrence-R-Chester)     voted 178 to 13 to direct the first $150 million generated by the tax to the General Fund and any remaining funds would be divided equally between the state employee and school employee retirement funds.  The previous language in the bill would direct all the  revenue to the General Fund, which Rep. DiGirolamo said would only generate around $150 million or so a year.  The revenue in this bill does not benefit any environmental programs.
  • Move Wells 50 Feet Without New Permit: A4203 (Benninghoff-R-Mifflin) was approved  100 to 91 to amend the bill to allow an oil and gas permit holder to move a well a maximum of 50 feet from the original permitted location without getting a new permit.
  • Multi-Year Well Permits: A4209 (Cutler-R-Lancaster) provides DEP with option of multi-year well permits authorized by regulations passed 189 to 1.
  • Replaced Water Supply Protection Provisions:  A4207 (Cutler-R-Lancaster) replaced the existing provisions in the Oil and Gas law related to replacement of water supplies affected by oil and gas drilling, including the rebuttable presumption provisions by a vote of 128 to 68. The amendment takes out provisions now in Act 13 of 2012 saying replacement water supplies must meet “the standards established under the act of May 1, 1984 (P.L.206, No.43), known as the Pennsylvania Safe Drinking Water Act, or is comparable to the quality of the water supply before it was affected by the operator if that water supply exceeded those standards” and leaves in language that says a well operator “shall restore or replace the affected supply with an alternate source of water adequate in quantity or quality for the purposes served by the supply.” The Environmental Quality Board is directed to promulgate new regulations defining replacement water supply quality so the General Assembly has oversight of the requirement when a regulation is adopted.  This has been a point of disagreement with the industry for some time.

 Amendments Voted Down/Withdrawn

 The House narrowly voted down amendments that would have–

  •  Renamed The Impact Fee: Amendment A4531 (Maher-R-Allegheny) simply renaming the existing Act 13 drilling impact fee a “severance tax” by a vote of 84 to 109;
  • Limited Forced Pooling: A4651 (Oberlander-R-Armstrong) providing for a limited forced pooling requirement for extracting natural gas from unrelated gas lessors was voted down 51 to 142.
  • Eliminating The Severance Tax Thru Credits: Amendment A4126 (Ortitay-R-Allegheny) was withdrawn that would have eliminated severance tax revenue by giving a well driller credit for the impact fees paid. 
  • 2-Year Moratorium On All DEP Regulations: Voted down A4190 (Oberlander-R- Armstrong)     85 to 107 a 2-year moratorium on DEP adopting, promulgating or submitting for public comment of any “regulations, technical guidance, general permits, permit conditions or rulemaking of any kind” and reassign staff to review permit applications.

DEP may adopt or promulgate technical guidance documents or policy statements “to protect or preserve the health, safety or welfare of the people of this Commonwealth in order to avoid or mitigate an imminent or occurring emergency or other natural disaster.”

The Environmental Quality Board may promulgate regulations “to protect or preserve the health, safety or welfare of the people of this Commonwealth in order to avoid or mitigate an imminent or occurring emergency or other natural disaster.”

  •  Allowing Drillers To Start Well Pads, Access Roads Without Permits: A4204 (Oberlander-R- Armstrong) would have allowed well drillers to begin earth disturbance activity on new well sites  and access roads only with a written notice to the surface landowner or if they obtained an oil and gas well permit. It eliminated the requirement for any DEP permits at this stage.  The amendment was withdrawn after debate. 
  • Allowing Drillers To Operate Then Get Permits:  A4411 (C.Quinn-R-Delaware)     gives unconventional oil and gas operations 30 days after operations begin under a provisional permit to apply for any other needed  DEP air quality permits failed 74 to 117.
  • Moratorium On Seismic Impact Conditions: A4532 (Benninghoff-R-Mifflin) providing for a moratorium on any DEP or EQB action to promulgate any guidance, policy, technical guidance, permit or rule on induced seismicity until DEP does a peer-reviewed study of potential seismic impacts associated with “underground activities” was “over” without taking a vote. DEP added conditions to two underground drilling waste injection wells         in Elk, Indiana counties in March related to seismic activity.
  • Well Pad Restoration Requirements: A4206 (Oberlander-R-Armstrong) requiring the restoration of drilling well pads within 24 months on well pads with multiple wells failed 93 to 97. 
  • Undoing Minimum Royalty Provisions: A4292 (Bloom-R-Cumberland)      to prohibit any part of the bill to the impair existing contracts which was designed to nullify the provisions related to minimum royalty requirements was “over” and not voted on.
  • Give Manufacturer’s Tax Credit To Drilling Companies:  A4517 (Marshall-R-Beaver) making drilling companies paying severance tax eligible for $4 million Manufacturers’ Tax Credit for payments made failed 93 to 99.

The House plans to return to voting session on December 4, but no word yet on when or if they will pick up consideration of the bill.*

*PA Environment Digest (Nov 21, 2017) – House Leaves Town Without Finishing Debate On Natural Gas Severance Tax Bill

Posted: 11-22-2017


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