Pennsylvania could finally get a severance tax — by giving the impact fee a new name

HARRISBURG — Tired of hearing complaints that Pennsylvania is the only major gas-producing state in the nation without a severance tax, a Pennsylvania House committee on Monday decided to quiet the critics by giving the current fee on shale wells a new name.

With a 15-11 vote along party lines, the chamber’s energy committee agreed to amend a bill to “rechristen” the impact fee that has been assessed on shale gas wells since 2012 as a severance tax. The committee did not yet vote to advance the amended bill to the House floor.

The move came as at least 25 House members sought to force a floor vote on a shale tax bill proposed by Rep. Kate Harper, R-Montgomery, which had been stuck in the energy committee since January.

Instead, Ms. Harper’s proposal — a 3.5 percent severance tax based on the volume of gas produced to be levied on top of the current impact fee — was deleted and replaced by the renaming amendment by committee chairman Rep. John Maher, R-Upper St. Clair.

He said the “rechristening” would “make it clear that we are, in fact, burdening the industry” with a tax.

Pennsylvania’s impact fee raises roughly $200 million annually from Marcellus and Utica shale companies based on the number of wells they drill. Unlike more typical severance taxes levied by other states, the impact fee is not directly tied to the volume of gas the wells produce.

The long-simmering debate about taxing Pennsylvania’s voluminous shale gas production resurfaced in July when the GOP-controlled Senate passed a variable severance tax in a package of budget-related bills that have the support of Democratic Gov. Tom Wolf. The Senate’s tax proposal was married to provisions meant to speed up environmental permits for the drilling industry by deeming permits approved if regulators have not acted on them within usually a month or two of their submission.

The Senate’s budget proposal is now in the Republican-led House, where it faces a skeptical audience.

House Speaker Mike Turzai said at a morning news conference held by opponents of a shale tax that he and many colleagues are “steadfastly opposed” to the effort to force a vote on Ms. Harper’s tax proposal “just as we are to the severance tax vote itself.

“I’m convinced from talking to my friends and neighbors that this tax in any form is going to put their jobs at risk,” he said.

Ms. Harper said no one who was pushing for consideration of her severance tax idea would want to force a vote now on a bill that simply gives the fee a different name.

“It was ruined,” she said. “You can call the impact fee whatever you want, but it’s not the same thing.”

Later, in a statement, she said she intends to try to amend the revised bill to implement a 5 percent severance tax and direct the revenues to communities with drilling, state police, teacher pensions and environmental programs.

A spokesman for House Democrats also said it might still be possible to push for a vote to move the original version of the bill out of committee, although its fate after that is uncertain.

Mr. Maher said he expects the committee’s move to deflect the immediate push for a stand-alone severance tax bill “will permit useful, adult deliberations to proceed” on the appropriate structure for a shale tax, which he said would be best addressed in legislation that deals with the industry broadly but is not enmeshed in the budget.

He also said he thinks there are better ways to address drilling-related permitting delays than the provisions proposed in the Senate budget bills, which are likely to face legal challenges from environmental groups if they are adopted.

“We ought to do our best to have durable answers to these questions,” he said, “rather than, let’s just kick it down the road to the courts.”

Laura Legere:

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