May 22, 2009
The General Assembly is in the first of a two week break from session and returns on June 1st.
The primary focus of the time spent between then and the summer break will be the passage of the budget. The Senate Republicans have passed their proposed budget which has been met with a great deal of resistance from the House Democrats and the Governor’s administration. The budget did not include the severance tax proposed by the Governor during his budget address. With a deficit approaching $3 billion there is much speculation that the June 30 deadline for passage might not be met.
The House Appropriations Committee held two days of hearings this week during which interest groups unhappy with the Senate’s budget were able to testify. This session of the General Assembly, which began in January, has yielded 28 plus pieces of legislation that are related to natural gas production in a variety of ways.
To see a complete list of the legislation, click here.
So far, legislation authorizing the sale of state lands and distributing the revenue and legislation establishing a Coal Bed Methane Review Board are the only two pieces of legislation on the list that have passed one of the two chambers. SB 490 (M.J. White) has passed the Senate and has been in the House Environmental Resources & Energy Committee since late March. The bill distributes a total of $174 million dollars with $1 million to County Conservation Districts, $3.5 million for the nutrient credit trading program, $1 million for the Natural Heritage Program and Natural Heritage Inventory, $500k to the Game Commission and $500k to the Fish Commission. To read the bill, click here.
SB 275 (D. White) has passed the Senate and also was referred to the House Environmental Resources & Energy Committee. To read the bill, click here.
Other legislation that has seen or is scheduled to see activity deals with disclosure, rollback taxes related to the Clean and Green Law, and pipeline safety. On the topic of disclosure, SB 297 (Yaw) has been reported from the Senate Environmental Resources & Energy Committee and awaits consideration in the Senate Appropriations Committee before it makes its way to the Senate floor.
The bill; requires oil and gas well operators to submit a semi-annual report in addition to the existing annual report, removes the five-year confidentiality provision of oil and gas production reports and requires the DEP to post reports on their website. An amendment adopted in committee; reinstates the requirement for non-Marcellus shale well operators to only report annually, specifies that DEP must only publish Marcellus Shale well production reports online and directs DEP to use funds from permitting fees to pay for costs incurred under this legislation. To read the bill, click here.
A bill in each chamber addressing Clean and Green and rollback taxes has been scheduled for a vote in early June. The Clean and Green program is a state program designed to preserve agricultural and forest land. The purpose of the law is to provide a real estate tax benefit to owners of agricultural or forest land by taxing that land on the basis of its “use value” rather than its market value.
This act provides preferential assessment to any individuals who agree to maintain their land solely devoted to agricultural use, agricultural reserve, or forest reserve use. With the onset of activity in the Marcellus Play, there is widespread concern that the provision that mandates rollback taxes on the entire parcel should only be applied to the piece of the parcel where drilling or other activity occurs. The House Agriculture and Rural Affairs Committee has scheduled HB 1394 (Houghton) for a vote on June 2nd.
The bill deals with oil and gas and coal bed methane. It was introduced by the sponsor at the request of the Administration. To read the bill click here. To read a summary, click here.
The Committee recently held a hearing on the bill.
The Senate Agriculture and Rural Affairs Committee has scheduled Senator Gene Yaw’s SB 298 for a vote on June 9th. The bill also addresses concerns about adverse impacts on Pennsylvania Clean & Green and specifies that the owner of land under the Farmland & Forest Assessment Act that is subject to a preferential assessment may split of and lease land without rollback taxes being imposed on the entire tract. To see the co-sponsorship memo click here. To see the legislation click here.
In the area of safety, HB 1128 sponsored by Consumer Affairs Committee Chairman Joe Preston made its way to the House Floor. The bill increases gas pipeline violations from $10,000 to $100,000 per day and raises the cap on the fines from 500,000 to $1,000,000. To read the bill, click here.
Anamendmentwas filed to the bill that would establish the Mid-Atlantic Area Natural Gas Compact allowing forintrastatecompactsto regulate natural gas lines. To read the amendment, click here.
This amendment can be attributed to theWilliams Transcoeminent domain activity inChester County. The House changed their session to non-voting so the bill and amendment were not considered, but could be when session resumes in June.
So what might happen when session resumes?
It looks like legislation addressing the Clean and Green law might be enacted with both chambers moving legislation. During a hearing on this topic, the County Commissioners Association expressed opposition to HB 1394 in its present form so there is likely to be efforts to amend that and other legislation addressing this issue. Making up the budget deficit will undoubtedly result in debate and votes on financially related bills. The two sides are gearing up for debate over whether to impose a severance tax or to allow more state land to be leased. To get some sense of the competing proposals you need look no further than HB 1489 and HB 1050.
House Environmental Resources and Energy Chairman Camille Bud George has introduced HB 1489. The bill requires a driller to apply for a severance tax registration certificate, requires wellhead meters and establishes a reporting period defined as "a calendar month in which natural gas is severed.” The tax imposed would be 5% of the gross value of units severed at the wellhead during a reporting period, plus 4.7 cents per unit severed. To read the bill, click here.
There is another proposal that is in the offing as an alternative to the severance tax. HB 1050 (Reed), a proposal announced by the House Republican Energy Task Force as the “Energize PA” initiative would expand the state lands available for leasing to drill for natural gas and additionally lead to royalties that would provide an estimate $260 million a year for the Commonwealth’s budget. To read the bill, click here. To read the press packet, click here.
You may also want to keep an eye on HB 10 (DeWeese).
This bill would essentially allow for a property tax on the gas that’s in the ground. To see the press release on this bill, click here.
Finally it should be noted that any bill that is making its way through the legislative process will include the opportunity for amendment. It wouldn’t be surprising to see some of the bills that haven’t moved yet be offered as amendments to bills that are on the calendar.
Fasten your seat belts!
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