Legislation Watch: Pennsylvania's Impact Fee - November 16, 2011

This post was written by Jennifer Smokelin and Nicolle Bagnell.

Are the Pennsylvania House and Senate setting up to pass legislation to assess an impact fee on natural gas drillers and strengthen oversight of the industry by week's end?

On Monday, legislation to assess an impact fee on natural gas drillers was approved by a key Pennsylvania state Senate panel. It is headed for a final vote in the Senate chamber today. The new state-assessed impact fee would levy an initial base cost of $50,000 per well, which would decrease annually until year 11 of production. Year 11 through year 20 of production would then cost $10,000 per well. The levy would increase if natural gas prices went up. The fee proposal would raise $94 million from wells that were producing this year and would rise to $155 million next year.

Across the Rotunda in Harrisburg, the state House of Representatives began debate on potential amendments to the House's proposed drilling impact fee and regulatory measure. Discussion on the House-drafted measure is expected to continue this week in an effort to pass legislation by the end of the week.

The debate on these Senate and House measures focuses on the amount of the impact fee and how much deference is given to local zoning laws regarding drilling. Democrats tend to voice opposition to allowing state government to determine whether local drilling rules via zoning are reasonable. Republicans and Governer Corbett's administration, however, favor an approach that would entirely preempt local regulation of drilling operations, arguing that standardized rules on a state level would encourage natural gas companies to continue creating jobs in Pennsylvania. Additional details are here.

Stay tuned this week for follow-up on this breaking legislation….

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