May 8, 2009

The House Agriculture Committee held a public hearing yesterday on HB 984 and HB 1394.  The bills deal with the Clean & Green Law and rollback taxes when land under the program is developed. 

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.

HB 984 (Kessler) focuses on wind power generation.  To read the bill, click here. To read a summary, click here.  HB 1394 (Houghton) 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 first to testify was Secretary of Agriculture Dennis Wolff.  The Secretary expressed his agency’s support for both bills.  To read his testimony, click here.  Committee Chairman Mike Hanna (Clinton) asked the Secretary how much of PA’s farmland is in the Marcellus Shale Play.  The Secretary responded that the percentage of PA taken up by the Play would be equal to the amount of PA farm land. Representative David Millard (Columbia) asked the Secretary if he could estimate the economic impact of the Marcellus. 

The Secretary said he did not have a specific estimate due in part to the reporting timeframes but did note that in drilling companies quarterly reports that the wells are producing very well.  He cited Cabot Oil & Gas as an example. Representative Garth Everett (Wyoming) asked about the effect of the rollback taxes on shallow wells.  The Secretary said that they have not been impacted. Lycoming County Commissioner Rebecca Burke and Doug Hill from the County Commissioners Association of PA offered their testimony next.  They testified in opposition to both bills and offered to work with the committee to address those issues. To read their testimony click here. 

Most of PA’s counties have not moved forward to enforce the existing law in anticipation of action by the General Assembly.  They cited the current enforcement in Bradford County noting that they are actively enforcing Clean and Green.  When the County issued the first violations, they reported that all were paid on time and that the company that had leased the land paid in 75% of the instances.  CCAP then spent the rest of their testimony advocating for the passage of HB 10 (DeWeese) which would allow for the taxation of gas in the ground. 

Representative Mark Keller (Perry) noted in their testimony they cited the use of the Erosion & Sediment plan to use as the footprint for the rollback taxes.  Representative Richard Mirabito (Lycoming) asked the Commissioner for an estimate of the economic impact of HB 10.  Commissioner Burke and Doug Hill responded that they did not have an estimate but they understood that Penn State was working on such an estimate.  Doug Hill did note that the Bald Eagle area school district estimates that they would receive approximately $1 million in revenue.  Representative Tom Houghton (Chester) asked if they felt there would be consistency statewide if the E & S plan was used. 

Commissioner Burke responded that since this responsibility was recently taken over by the DEP that there would likely be consistency. The next presenter was Lester Greevy, a Williamsport attorney with experience in leasing issues.  To read his testimony, click here.  Mr. Greevey cited the current lack of uniformity in Clean & Green.  He supports HB 1394 but would like to see language to clarify that the rollback would be applied retroactively and also suggested the royalty owner receive production information on each check stub.

The PA Farm Bureau (PFB) was the last to testify.  To read the testimony of Mr. Joel Rotz, click here.  The PFB was generally supportive of both bills but requested that the provisions should be broadened to include any Alternative Energy Development System from Tier 1 sources identified in the Alternative Energy Portfolio Standard.  Mr. Rotz also called for language to provide that use of the land is still considered primarily agricultural when more than half of the energy is used on the farm.