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As the possibility of a severance tax increases, the gas industry is piling money into lobbying and campaign contributions to ward the tax off, or greatly reduce it, or make a deal with legislators by obtaining concessions on local land use control and citizen’s property rights.

The article below is an editorial on the severance tax that appeared in the Philadelphia Inquirer.

RDA requests that you please sign on to the Earthjustice letter to DEP Secretary John Hangar. (See action step)

Please note very last item. “Save the date”.

Shale Gas Tax Is Needed

Legislators in Harrisburg should resist the efforts of natural-gas companies to obtain a sweetheart deal of tax loopholes and lax drilling regulations.

The legislature has agreed to enact an extraction tax on methane wells by Oct. 1st. Pennsylvania is the largest gas-producing state without such a tax to help pay for environmental protection and accident cleanups. It's overdue.

But as the deadline approaches, natural-gas companies are demanding rules on their terms. They want generous exceptions to a fair tax system, and to write favorable land-use regulations that would govern their industry.

Natural-gas companies are lobbying the legislature to resolve complicated issues of landowners' rights and local zoning in the industry's favor. They want state laws on drilling to preempt local zoning ordinances, and the right to drill under a property without the landowner's permission.

These issues deserve careful study and thoughtful debate, not a rush job in a few weeks to satisfy an industry wielding its clout.

"They could locate their operation right next to a house," state Rep. Bob Freeman (D., Northampton) said of the drillers' proposal. "I don't see where they get the right to dictate conditions."

If the drillers don't get their way, the implication is that Senate Republican allies who've taken gushers of campaign cash from the industry could reject a production tax. Senate President Pro Tempore Joe Scarnati (R., Jefferson) has received more than $105,000 in campaign donations from the gas industry in the past decade. If he burrows any deeper into the drillers' pockets, Scarnati may get luckier than Jed Clampett.

Oil and gas companies have flooded Harrisburg with more than $4 million spent on lobbying since 2007, and $3 million given to state candidates since 2001. Yet some in the industry feel that gas companies should be tossing even more money around the state Capitol.

Kathryn Klaber, president of the Marcellus Shale Coalition, which represents drillers, told the Inquirer Editorial Board that the industry's donations "are probably not where they should be."

She needn't worry. Contributions to legislators will soar even higher by the next reporting period as firms influence legislators and take full advantage of Pennsylvania's shameful absence of campaign-finance limits.

At the same time, the industry is seeking to water down the tax proposed by Gov. Rendell and Democrats in the legislature.

Rendell has proposed a 5 percent tax on the value of methane extracted, plus 4.7 cents per thousand cubic feet. It's modeled on the tax that West Virginia imposes on drillers. A tax should have been enacted last year, but Sen. Scarnati & friends killed it.

(RDA notes: In 2009, Range Resources, one of the largest drillers in Pennsylvania’s Marcellus Shale, got the highest federal subsidy of any company in the nation. Over four years, it paid a rate of 0.4 percent in taxes on billions of dollars of revenue, according to Businessweek. The official corporate tax rate is 35 percent.)

Now that a tax is looming again, the industry wants it to be ridiculously low. The coalition seeks a tax of 1.5 percent in the first five years of a well's operation - typically the period of peak production - and 5 percent thereafter, until production falls below a certain level.

(RDA notes: Industry analysts estimate that half of a well’s gas production is depleted in the first year to 18 months)

Under the drillers' proposal, they would pay an effective tax rate of no more than 2.3 percent on most wells, according to an analysis by the nonprofit Pennsylvania Budget and Policy left in Harrisburg.

(RDA notes: “Emerging Giant", the gas industry’s produced and funded report out of PSU admitted that gas production in PA carries an 11% premium for the industry because of PA’s lack of taxes as compared to other states.)

An undetermined portion of this revenue will go to municipalities to help them deal with the impact of drilling, including road repairs and environmental cleanup. The industry shouldn't be trying to skimp on such obligations while it pours millions into buying friends in Harrisburg.

The boom of methane drilling in Pennsylvania is invading public lands, cashing in on natural resources, contaminating drinking water, and posing other serious environmental risks.

It's time for public officials, especially Democrats in the legislature and Gov. Rendell, to stand up for the public's interest in this debate.

Click here to read more.

RDA ACTION ITEM

Please read the letter below and help support DEP’s effort to protect the Monongahela River by signing onto the Earthjustice letter. To take action, send an email to This e-mail address is being protected from spambots. You need JavaScript enabled to view it.

Write “Monongahela River” on the reference line. In the text, write “Please sign my name to the letter to DEP Secretary J. Hangar.” Be sure to list your full name and address in the text of the message.

Earthjustice
156 William Street, Suite 800
New York, New York 10038
www.earthjustice.org

August 26, 2010

Secretary John Hanger
Pennsylvania Department of Environmental Protection
Rachel Carson State Office Building
400 Market Street
Harrisburg, PA 17101

Re: Listing of Monongahela River as Impaired Water under Clean Water Act Section 303(d)

Dear Secretary Hanger:

On behalf of Earthjustice and the undersigned organizations and individuals, we write in strong support of the decision by the Department of Environmental Protection (“DEP”) to designate the Monongahela River as impaired on DEP’s upcoming impaired waters list. The Monongahela River is a vital resource for business and industry, including tourism and recreation, and a source of drinking water for approximately 350,000 people. Unfortunately, levels of total dissolved solids (“TDS”) in the River have exceeded water quality standards under Pennsylvania law for three consecutive years, including this year, notwithstanding DEP’s efforts to reduce discharges of wastewaters with high TDS concentrations. Listing the Monongahela River as an impaired water and developing of a total maximum daily load for TDS under section 303(d) of the Clean Water Act, 33 U.S.C. § 1313, plainly is the only responsible—and the only lawful—course of action.

As you recognized last April, the failure to control TDS produces environmental and economic tragedies on the order of Dunkard Creek, where a salt-loving algae killed all aquatic wildlife in nearly 40 miles of stream. No one wants to repeat that mistake. But the Monongahela River now ranks number nine on American Rivers’ 2010 Most Endangered Rivers list, and anglers already have noted declines of some fish species in the river. We therefore encourage DEP to continue pressing vigorously for the impairment designation of the Monongahela River so that lawful and healthy TDS levels can be restored as soon as possible and maintained for the next generation.

Respectfully,

Deborah Goldberg
Managing Attorney

SAVE THE DATE!

7:00 PM, Wednesday, September 15th. RDA General membership meeting at the Pajama Factory, in Williamsport’s west end. Park in the lot off Cemetery Street, between Memorial and Park Ave. Look for signs directing you to the meeting location.

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