Rep. George Urges Final Adoption Of Natural Gas Production Severance Tax

Rep. Camille "Bud" George (D-Clearfield), Majority Chair of the House Environmental Resources and Energy Committee, today rebutted contentions that now is not the time for Pennsylvania to enact a severance tax on gas extracted from the Marcellus Shale Deposit.

"A severance tax was a good idea in February and remains so today," said Rep. George. "Low gas prices and shortages of storage capacity have not deterred the drilling bonanza in Pennsylvania and neither will an extraction tax."

The bulk of Rep. George's severance tax language from his House Bill 1489 was amended in Rules Committee Thursday into his House Bill 1531, which was returned to the House after being amended in the state Senate.

Rep. George's original House Bill 1531 would enable Pennsylvanians to continue to support the Military Family Relief Assistance Program through their state income tax refunds. Amendments to the bill include provisions for tax amnesty and the Educational Improvement Tax Credit Program. The amended bill could face a vote Friday by the full House.

"Instead of chiseling social clubs and arts groups of their last nickels and forever changing the nature of our forests, a severance tax would guarantee a fair share for Pennsylvania in return for its gas, water, infrastructure and environmental risks and costs," Rep. George said. "Profuse campaign contributions and lobbyist expenditures should not skew fairness."

"More than 1,000 drilling permits have been issued and roughly 300 Marcellus Shale wells have been drilled this year alone," Rep. George said. "We're not talking baby steps for the industry but giant leaps."

Rep. George said Kent Moors, a Duquesne University professor and internationally recognized expert on gas policy and finances, is predicting natural gas prices to increase 46 percent by January and to almost double to $7 per cubic foot by July.

"What will be the excuse of the 'tax you, not me' crowd then? Rep. George said. "If not pinned down, the gas industry will be drilling Pennsylvania taxpayers along with the gas."

A recent analysis determined that Rep. George's House Bill 1489, the Natural Resource Severance Tax Act, would provide more than $80 million this year, even with one-quarter of the fiscal year already gone.

"The CEO of Chesapeake Energy, a major driller in Pennsylvania, could pay this tax for the entire industry for the rest of the fiscal year and still have more than $30 million left," Rep. George said. "Yet, the industry continues to cry about a severance tax in Pennsylvania even though it is the same tax they have paid for 20 years in West Virginia."

Rep. George said the state of New York this week released a draft of its 18-month study of the environmental impacts of drilling in the Marcellus Shale. The information is available online.

The highly technical report that details the many environmental challenges posed by Marcellus Shale drilling, including the many chemicals used in the hydraulic fracturing of the strata to get at the gas.

"My severance tax legislation recognizes that extraction comes at a cost and those costs should be borne by the drillers," Rep. George said.