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Gov. Wolf Backs New Bipartisan Severance Tax, Permit Reform, Minimum Royalty Bills; No Dedicated Funding For Environmental Programs

Gov. Tom Wolf Monday announced he is backing new bipartisan legislation establishing a natural gas production severance tax and addressing oil and gas permitting reforms and minimum royalty payments to oil and gas leaseholders.

The legislation-- Senate Bill 1000 (Click Here for a copy of the language) and House Bill 2253-- was announced with prime sponsors Sen. John Yudichak (D-Luzerne), Minority Chair of the Senate Environmental Resources and Energy Committee, Sen. Tom Killion (R-Delaware), Rep. Jake Wheatley (D-Allegheny) and Rep. Bernie O’Neill (R-Bucks).

The proposed tax would raise an estimated $248.7 million next fiscal year and would hold harmless revenues from the existing Act 13 drilling impact fee at $200 million annually and the remainder would go to the General Fund.

There is no dedicated funding for environmental programs.

The well permitting changes would include those proposed in a permitting reform white paper issued in January by DEP-- authorizing permitting of multiple wells on one pad with one application, allow adjustments to the well bore location by up to 50 feet without permit amendments and eliminate the requirement a well be constructed in one year and replace it with a 3-year term.

“Since day one of my term as governor, I have fought to enact a reasonable severance tax that would give Pennsylvanians their fair share of the energy boom that is powered by resources that belong to all of us,” said Gov.Wolf. “I, along with this bipartisan coalition, am here to call on the House and Senate to pass these bills and get them to my desk so that they can become law and Pennsylvanians can begin to get the benefits that other states have had for years.”

“The measured severance tax and responsible permitting reforms, embodied in Senate Bill 1000, is fair to taxpayers and unleashes the full potential of the natural gas industry to create jobs all across Pennsylvania,” said Sen. Yudichak. “I applaud Gov.Wolf who has brought together Republicans and Democrats around the central idea that a fair severance tax is essential to protecting the environment and leveraging broader job growth in the natural gas industry.”

Sen. Killion, who is prime sponsor of the Growing Greener III initiative-- Senate Bill 1374 (still pending in the Senate)-- expressed his appreciation and support for this new initiative which he said will benefit areas like his where there is no natural gas drilling, but where pipelines are being built to bring the natural gas to market.

[Note: Senators Killion and Yudichak were part of a bipartisan group of 11 Senators who last September urged the Senate to devote a portion of any natural gas severance tax to the Environmental Stewardship (Growing Greener) Fund.]

“This modest proposal strikes the right balance between asking drillers to pay their fair share and giving them room to grow and continue providing jobs and economic benefits to our state,” said Rep. O’Neill. “The added revenue to the Commonwealth will help us provide additional support to education, human services and environmental programs and more.”

“As Democratic Chairman of the House Finance Committee I am always working toward fair tax policy,” said Rep. Wheatley. “Pennsylvania shouldn’t be the only gas producing state in the country without a severance tax benefiting our communities and the needs of our state.”

Reaction

Marcellus Shale Coalition president David Spigelmyer issued the following statement on the severance tax proposal-- “Gov. Wolf’s proposal for additional energy taxes will cost Pennsylvanians jobs, raise home energy costs for consumers, all while not helping a single student or school.

“Pennsylvanians want Gov. Wolf and their legislators to focus on creating good jobs that will make the Commonwealth a better place to invest and grow. They are tired of election-year political stunts and more tax-and-spend proposals that ultimately make Pennsylvania less competitive.

“Pennsylvania already has a natural gas tax that has generated nearly $1.5 billion in new revenue for our state. This tax, in addition to other state business taxes that our industry and their employees pay, delivers revenues directly to communities across the Commonwealth, making important community, environmental and conservation investments possible.

“Gov. Wolf claims to support energy workers and small businesses, yet he again proposes to smother this important growth sector with additional, job-crushing energy taxes.

“Rather than growing state government and appeasing public sector unions, Governor Wolf and policymakers need to focus on job creation, especially for our building trades and the manufacturing sector, in order to grow the economy.

“Harrisburg needs visionary leadership that advances the opportunities presented by the development of natural gas – not tired, misleading rhetoric that mischaracterizes the contributions of Pennsylvania job creators to our economy.”

(Photo: Reps. Wheatley, O’Neill, Gov. Wolf, Senators Yudichak, Killion.)

NewsClips:

AP: Wolf Backs New Natural Gas Severance Tax Bill [Nothing For The Environment]

Wolf, Bipartisan Legislators Proposed Natural Gas Severance Tax

Micek: Is 4th Time The Charm For Wolf On Natural Gas Severance Tax?

Meyer: Permit Disagreements In Severance Tax Argument Still Seem Irreconcilable

Governor, Legislators Unveil Bipartisan Severance Tax Proposal

Gov. Wolf Continues To Push For New Tax On Companies Who Drill For Gas In PA

Sisk: Wolf Again Pitches Severance Tax On Natural Gas

Op-Ed: Just Say No To Wolf’s Latest Severance Tax Push

Editorial: Gov. Wolf, Sen. Killion Pitch Marcellus Shale Tax [Nothing For The Environment]

11 Senators Urge Appropriations Chairs To Devote A Portion Of An Severance Tax To Growing Greener [September, 2017]