Natural Gas ‘Impact Fee’ Approved by Senate Committee

Yaw Urges Consideration of Royalty Tax Legislation

HARRISBURG – The Senate Environmental Resources and Energy Committee today unanimously approved amended legislation that would impose an impact fee on natural gas drilling companies in Pennsylvania, according to State Senator Gene Yaw (R-Lycoming).

Senate Bill 1100, sponsored by Senate President Pro Tempore Joseph Scarnati (R-Tioga), would impose a sliding fee on natural gas extraction depending on the price of natural gas and the amount each well produces. An amendment, offered by Senator Mary Jo White (R-Beaver) would remove the price adjustments and require an annual base fee.

The amendment also creates a ‘shale impact fee housing credit’ for counties that have low and moderate income housing with active unconventional wells.

“This legislation is an important step forward to ensuring that local communities and local governments impacted by the drilling receive much-needed support in the form of an impact fee,” said Yaw.

“Increased investment driven by the natural gas industry has resulted in unprecedented levels of growth throughout the Northern Tier. Never before has there been such an urgent need for residential and commercial real estate to fully serve this area. We have an obligation to ensure that the local housing market is viable for all area residents,” Yaw added.

Yaw also urged support for legislation that would make “royalty interests derived from Marcellus Shale irrespective of the well location” a real estate interest and thus a subject of taxation under the assessment law.

Senate Bill 744, sponsored by Yaw, would seek to give local governments a stake in their own decision-making regarding the industry within the respective municipal boundaries.

“As a real estate interest, the value of the gas well would be determined according to the law in the same manner as any other real estate interest in Pennsylvania, such as hotels, mini markets, shopping malls, industrial properties and homes,” Yaw said. “This bill is the only pending legislation, which would allow school districts to directly benefit from the gas industry.”

He added that until 2002, gas wells were taxed in this manner. In 2002, however, the Pennsylvania Supreme Court ruled that our statute was not broad enough to include gas wells.

Contact: Nick Troutman
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