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Senators Yudichak, Erickson Introduce Bipartisan Marcellus Shale Severance Tax

Sen. John T. Yudichak (D-Luzerne) this week announced legislation-- Senate Bill 905-- that would implement a severance tax on the extraction of natural gas in Pennsylvania saying it is time for a fair and responsible severance tax on natural gas.

            Joining Sen. Yudichak at the news conference were Sen. Ted Erickson (R-Delaware) and Sen. John Blake (D-Lackawanna), co-sponsors of the bill, Larry Williamson, Renew Growing Greener Coalition, and Chris Carsia, Executive Director Greater Hazleton Joint Sewer Authority.
            Video Blog: Sen. John Yudichak Opening Comments
                                 Sen. Ted Erickson
                                 Sen. John Blake
                                 Larry Williamson
            “My goal is to initiate a fair and responsible severance tax in Pennsylvania. This proposal will generate significant revenue for local governments, our clean water infrastructure, and the Growing Greener program,” Sen. Yudichak said. “At the same time, such a moderate tax would allow the industry to continue expanding and creating jobs, as well as generate the economic development activity that Pennsylvania so desperately needs.”
            “I am pleased to stand with my colleague, Sen. Yudichak, to support this much needed legislation,” Sen. Erickson said. “The fact that this bill has bipartisan support shows the need for this tax goes beyond partisan politics. I believe this bill invests the tax revenues in a responsible way for the protection of our environment and the communities directly affected by the expanding natural gas industry.”
            Under Sen. Yudichak’s proposal, the severance tax would be gradually implemented based on the gas production of each well:
-- A severance tax of 2 percent of the gross value of the natural gas severed at the wellhead; this tax rate would be in place for the first three years of well production;
-- When the well has been in production for more than three years, the tax rate would increase to 5 percent;
-- The tax rate would readjust back to 2 percent if a well’s rate of production fell below 150 MCF of natural gas per day and above 60 MCF per day; and
-- Wells that produce less than 60 MCF of natural gas per day are exempt from the tax.
            If implemented, the severance tax would go into effect on July 1, 2011.
            According to Sen. Yudichak, revenue from the severance tax would be distributed to three program areas:
-- 33 percent of the revenue generated to the Commonwealth Financing Authority for water supply, wastewater treatment, stormwater and flood control projects;
-- 33 percent to the Environmental Stewardship Fund (Growing Greener); and
-- 34 percent to local governments in those areas of Pennsylvania that are experiencing the direct effects of natural gas drilling.
            “I think it is important to note that investments in our clean water infrastructure also create jobs,” Sen. Yudichak said. “Also, in areas where there is drilling activity, local governments are faced with a number of difficult issues. Revenue from a severance tax will benefit those communities.”
            It is estimated the tax could generate more than $126 million in the first year and more than $406 million by 2016. These estimates are based on current prices, the number of wells, additional wells expected to be permitted in 2011 and expected production levels.
            Also co-sponsoring the bill are Senators Jay Costa (D-Allegheny), Charles McIlhinney (R-Bucks), Wayne Fontana (D-Allegheny), Stuart Greenleaf (R-Montgomery) and Anthony Williams (D-Philadelphia).
            NewsClips: Yudichak Proposes New Gas Severance Tax
                                Erickson Proposes Tax On Natural Gas Drilling
                                Yudichak Has High Hopes For Tax On Gas Extraction
                                Senate Dem, Republican Push Severance Tax Bill
                                Pocono Senator Pushes Natural Gas Tax
                                Montgomery Legislators Air Views On Marcellus Tax
                                Corbett: PA Gets Millions In Taxes From Marcellus Without New Tax
                                Corbett Resolute In Gas Tax Opposition
                                Corbett Maintains Hard Line On No Marcellus Shale Tax
                                Corbett: We've Got To Find A Balance On Impact Fees
                                Governor Stands By Stance Against Drilling Tax
                               PA Could Allow Gas Drilling On Prisons' Properties
                                Counties Weigh Drilling Impact Fee
                                Marcellus Impact Fee Proposal In The Works
                                State: Local Drilling Impacts Could Bring Aid
                                Reviewing The Marcellus Shale Tax, Fee Issue
                                Students Pitch Their Agenda In Harrisburg
                                Column: Corbett Plays Semantic Shell Game On Marcellus
                                Op-Ed: Making The Case For A Drilling Tax, John Quigley
                                Op-Ed: Case Of Addition By Extraction? Not For Corbett
                                Op-Ed: The Impact Of Marcellus Shale Impact Fees
                                Editorial: Patriot Opposes Gas Severance Tax (April Fool)
                                Editorial: Three Letter Words, Marcellus Tax, Fee
                                Editorial: Time To Listen To Reason On Marcellus Fee


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