marcellus-shale

State Senator Joe Scarnati (R-Jefferson) announced the distribution of $361,165 in Marcellus Shale impact fee revenue to county conservation districts in the 25th Senatorial District.

The revenue distributed to the 25th Senatorial District is part of the $2.5 million in Marcellus Shale impact fees designated for county conservation districts. The $2.5 million was collected statewide for calendar year 2011 and distributed to conservation districts by the Public Utility Commission in 2012-2013.

Under the impact fee legislation which was spearheaded by Senator Scarnati, the funds allocated for county conservation districts were split evenly, with $1.25 million in block grants of $18,939 for each of the 66 conservation districts across the commonwealth. The remaining $1.25 million was awarded in supplemental grants for administrative costs and well-impact costs.

According to Scarnati, eligible expenses for the use of these funds can include providing technical assistance and advice to local governments, land and drainage operations, assisting environmental advisory councils and administering natural resource programs.

“Marcellus Shale natural gas development is not only spurring job creation and economic growth in Pennsylvania communities, it is also helping to support the mission of our conservation districts,” Scarnati said. “These funds will assist our county conservation districts with promoting wise use of Pennsylvania’s natural resources, as well as protecting and restoring our natural environment through conservation of soil, water and related resources.”

County Conservation districts in the 25th Senatorial District received the following portion of the distribution:

Cameron County – $34,753
Clearfield County – $44,877
Elk County – $38,516
Jefferson County – $36,007
McKean County – $38,337
Potter County – $39,860
Tioga County – $95,137
Warren County – $33,678
The revenue was distributed by the Pennsylvania Public Utility Commission, which under the Marcellus Shale impact fee, Act 13 of 2012, collects and distributes impact fees. The Marcellus Shale impact fee was established as part of legislation signed by Governor Corbett on February 14, 2012. Act 13 was passed after months of discussion among state government, local government, citizens, representatives of environmental groups and representatives of the industry. The law protects the environment by providing for environmental safeguards, while also imposing a reasonable annual impact fee on each well.

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CONTACT: Drew Crompton dcrompton@pasen.gov (717) 787-7084
Carol Maravic Milligan
Director
Senate Republican Communications
717-787-6725

HARRISBURG — The state Senate today approved legislation that would establish reasonable fees on gas drillers, establish strong environmental safeguards, and strengthen oversight of the Marcellus Shale drilling industry, according to Senator Joe Scarnati, R-Jefferson, who sponsored the measure.

Passage of Senate Bill 1100 comes after months of negotiation and compromise on a number of areas, including how funding would be allocated and local zoning issues.

“This legislation will help communities impacted by drilling, provide for reasonable local zoning parameters and implement strong environmental protections,” Scarnati said. “Through a reasonable and well-thought-out impact fee on shale companies, we can manage this tremendous resource in a way that improves our economy, creates new jobs and opportunities for our residents and protects our quality of life.”

Scarnati said his proposal would impose a tax rate of approximately a 3 percent on gas production – retroactive to 2010 — that is expected to generate tens of millions of dollars a year to help maintain roads and sewer systems in communities affected by the drilling.  It would also fund statewide initiatives that finance infrastructure improvement, environmental cleanups and open space.

Scarnati’s bill would impose a sliding fee of $50,000 per well in the first year of production, with a $10,000 reduction each subsequent year. Starting in the 11th year until the 20th year of the well, an annual fee of $10,000 is imposed.

According to estimates, the fee proposal would raise $94 million from wells that were producing gas this year, a figure that would rise to $155 million next year and $255 million by 2014.  Over the next five years the fee will yield more than $1 billion dollars.

Approximately 55 percent of the fees generated would go to counties and municipalities in the Marcellus Shale region and 45 percent to statewide infrastructure projects, environmental programs and other projects related to natural gas production.

Other funds also would be set aside for county conservation districts, firefighter training programs, the Fish and Boat Commission and for boosting availability of affordable housing.

The legislation also provide for standardized but flexible zoning standards which would allow communities to retain reasonable control over zoning power  — a “solid and important compromise” that Scarnati said has drawn support from local government groups because it provides for local authority while creating reasonable baselines.

Scarnati said the increased environmental safeguards include increased setbacks, a listing of all chemicals used at a drill site, provisions for water safety, an increase in well bonding, and increased penalties for environmental violations. 

“The Marcellus Shale industry is here to stay in Pennsylvania – bringing us jobs, huge economic benefits and the potential for energy independence,” Scarnati said.  “It makes sense to impose a reasonable impact fee on the industry to provide the funding necessary to further protect our natural resources, particularly at a time when our state is being forced to stretch our tax dollars.”

He pointed to the huge influx of jobs in the past several years and the continued need for workers with a variety of skills to propel the growing industry.

Researchers with the Marcellus Shale Education and Training Center estimate shale drilling will require between 3,700 and 15,000 direct jobs in central and northern Pennsylvania by 2013 and an additional 8,100 to 13,500 direct jobs in southwestern Pennsylvania by 2014

In addition, the state Department of Revenue estimates that natural gas drilling companies have paid more than $1.1 billion in taxes since 2006, including corporate taxes, sales taxes and employee withholding.

CONTACT: CAROL MILLIGAN (717) 787-6725

Video: Senator Scarnati Floor Remarks

Video: Senator Scarnati Floor Remarks

WARREN–Senator Joe Scarnati (R-25) and Representative Matt Baker (R-68) announced that a $3 million state grant has been released by the Corbett Administration for the Mansfield Central Business District Revitalization Project.

The funding is being made available through the Redevelopment Assistance Capital Program, which is intended to assist in the immediate creation of quality, family-sustaining jobs.

The funding will be used to make improvements to the downtown area, as part of an effort to bring new jobs and businesses to Mansfield.

“Revitalizing our downtown areas helps to preserve our sense of community and bring opportunities back to the area,” Scarnati said. “This investment by the state in Mansfield will help to create jobs, encourage economic development and improve the quality of life for area residents.”

“I am pleased that the Corbett administration realized the value of this grant and expedited the release of funds to aid in the revitalization efforts of the community,” said Baker. “This funding will go a long way in helping the community incorporate more cultural and recreational facilities that will attract more visitors to the area and provide more job opportunities for the local residents and university students who call Mansfield home.”

The Redevelopment Assistance Capital Program requires applicants to demonstrate they have secured non-state project funding as well.

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CONTACT:  Tim Nyquist (814) 726-7201

WARREN – Senate President Pro Tempore Joe Scarnati was pleased to see that Governor Tom Corbett included an impact fee on Marcellus Shale drilling in his recently announced comprehensive proposal.  However, Scarnati recognizes there are obstacles yet to be overcome as negotiations continue on this highly significant plan.

 “It was vital that the Governor weighed in on his recommendations for regulating and overseeing the Marcellus Shale industry,” Scarnati stated.  “There seems to be general agreement among all parties involved that there needs to be an impact fee that will not only assist local communities affected by drilling activities, but fund important related statewide environmental programs as well.”

 Scarnati expressed a strong willingness to negotiate the various proposals outlined in the Governor’s plan with the legislation he proposed six months ago.  With that said, Scarnati believes the final package must include a reasonable fee, increased environmental safety measures and incentives to use natural gas.  Also, there will be ongoing discussions with local officials and industry representatives to ensure that there is a balanced approach to zoning so that both sides do not continue to spend resources on legal costs.

 “As we move toward ensuring that communities across the Commonwealth are protected from the impacts of drilling, there will be discussion on the percentage that goes to local jurisdictions and what environmental programs will be funded and at what level,” Scarnati added.  “The most important thing is that we get some consistency, some confidence, and some reliability that the Commonwealth is moving in a direction that will foster growth in the industry while protecting our water, our neighborhoods, and our roads.”

“Negotiations between all parties will continue as we look to pass a final Marcellus Shale measure out of the Senate by the end of October, Scarnati concluded.  “I am confident that the final package will be reflective of our understanding of the need to balance the economic growth of this booming industry with the environmental health and well-being of the citizens of the Commonwealth.”

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CONTACT: DREW CROMPTON: 717-787-7084

WHO: Rep. Kathy Rapp (R-Warren) will co-chair a House Finance Committee informational hearing regarding Marcellus Shale Impact Fee proposals.

WHAT: Testifiers will include John Bortz, Warren County Commissioner; Craig Mayer, Marcellus Shale Coalition; Dave White, local producer; Arthur Stewart, local business owner; and concerned citizens James Slack and Stewart VanOrd.

DATE: Tuesday, Sept. 13

TIME: 10:00 a.m.

WHERE: Warren Holiday Inn

WARREN OFFICE CLOSING: Rapp’s Warren District Office will be closed Monday, Sept. 12 beginning at noon and all-day Tuesday due to the hearing. Normal office hours will resume Wednesday, Sept. 14.

Media contact:
Ty McCauslin,
717.772.9979,
tmccausl@pahousegop.com

Rep. Kathy Rapp (R-Warren/Forest/McKean) will co-chair a House Finance Committee informational hearing regarding Marcellus Shale impact fee proposals in September.

Additionally, Rapp is searching for a limited number of local residents willing to provide testimony on whether they would support or oppose an impact fee on Marcellus Shale drilling.

“As a lawmaker who unapologetically voted against legislation to impose the largest job-killing, natural gas severance tax in American history, most District 65 residents already know where I stand on this issue,” said Rapp. “Regardless of an individual position, this informational hearing will provide an ideal opportunity to make one’s voice heard before the House Finance Committee which is responsible for all state tax legislation, including personal income taxes, school property taxes and, most recently, proposals to tax or impose impact fees on the drilling of Marcellus Shale natural gas.”

The hearing is scheduled for Tuesday, Sept. 13, and will be held at the Warren Holiday Inn, beginning at 10 a.m. Anyone interested in testifying should contact Rapp’s Warren district office at (814) 723-5203 for more information.

For the latest legislative updates, visit RepRapp.com.

State Representative Kathy Rapp
65th District, Pennsylvania House of Representatives

Contact: Ty McCauslin
tmccausl@pahousegop.com
717.772.9979
(814) 723-5203

Applauds final 2011-12 state budget for fiscal responsibility, unprecedented public education investment and providing mandate relief to save school districts up to $500,000 

For the first-time since taking office in 2005, Rep. Kathy Rapp (R-Warren/Forest/McKean) voted in favor of the final 2011-12 state budget (House Bill 1485) last week. 

“After rejecting six consecutive unsustainable Rendell state budgets, I am pleased to support the 2011-12 state budget because it succeeds in not increasing the tax burden on Pennsylvania’s working citizens and job creators, while restoring $100 million for Accountability Block Grants that are extremely important to the rural school districts I represent to spend as they see fit on pre-K, all-day kindergarten and after-school tutoring programs,” said Rapp.   “It also benefits our regional Higher Education Council by increasing funding to the State System of Higher Education, state-related universities and community colleges to $1.6 billion.” 

Containing no tax increases, no new borrowing and totaling $27.1 billion, which is slightly lower than the original $27.3 billion spending limit set by Gov. Tom Corbett’s March budget proposal, specific 2011-12 state budget details include:   

  • $1.17 billion (4.1 percent) spending reduction from the 2010-11 state budget.   Passage of the 2011-12 state budget represents only the third time in nearly 40 years that state government will be spending less than the previous fiscal year. 
  • $404 million in House Republican proposed reductions to the governor’s originally proposed Department of Welfare (DPW) budget. DPW will receive $10.5 billion under the new General Fund budget. 
  • Restoration of the Capital Stock and Franchise Tax phase-out to provide Pennsylvania’s job creators with approximately $70 million in needed tax relief.  
  • Elimination of nearly 100 wasteful, non-essential or duplicative line-items and government programs. 
  • Absolutely zero-funding for so-called WAMs or “walking around money” previously made available to the governor, Legislature and politically connected special interests. 
  • More than 34 percent of total budget spending goes to PreK-12 education – the $5.35 billion basic education subsidy represents the single largest investment of state tax dollars for public education in state history.  

Rapp is especially pleased that her legislation to temporarily lift the public education mandate requiring professional development for certified school teachers and administrators (House Bill 1363) was incorporated into the 2011-12 state budget’s education omnibus amendment. 

Specifically, Rapp’s two-year moratorium applies to the 180 hours of continuing education required every five years for Pennsylvania public school certificate holders.   However, the decision on whether to relax the continuing education requirement will be left up to local school districts. 

Nothing in this moratorium prevents public school teachers or administrators from continuing their education, but school districts would have the option of choosing not to pay for this program.   In addition, the continuing education moratorium does not apply to any continuing education training deemed necessary by the Pennsylvania Department of Education or the federal government. 

“The purpose of this moratorium is to give local districts up to $500,000 in extra flexibility to address their most important fiscal priorities, while still providing quality academic programs,” said Rapp.   “In short, Pennsylvania school districts now have an additional cost-cutting strategy to balance their budgets and even less of an excuse to raise taxes on local property owners.”  

For the latest legislative updates, visit RepRapp.com

Contact:  Ty McCauslin
tmccausl@pahousegop.com
717.772.9979

Rep. Bill Adolph (R-Delaware) and a majority of members in the House of Representatives passed the 2011-12 state budget Wednesday evening. With the approval of both the House and Senate the budget will go to the governor for his signature.

“This is a very difficult budget year with the expiration of $3 billion in federal stimulus funds. These funds artificially inflated state spending, and we are now forced to realign state government spending based on sustainable revenue,” said Adolph.

“The House and Senate worked with the administration to make adjustments to the governor’s proposed budget and used the limited resources for next fiscal year to redirect funding to education and demand more efficiency and accountability from the Department of Public Welfare,” Adolph continued.

The state budget of $27.148 billion represents a reduction of $1.1 billion or 4 percent compared to the 2010-11 budget. There are no tax increases on Pennsylvania families or businesses included in this budget.

“This budget is a historic budget in that it is only the third time in nearly 40 years we are spending less than the prior year, and it is done on-time for the first time in eight years. Now Pennsylvanians can be sure state government will continue uninterrupted on a sustainable path that does not spend more money than it takes in,” said Adolph .

Contact: Mike Stoll
mstoll@pahousegop.com
717.787.1711

Legislation sponsored by Rep. Kathy Rapp (R-Warren/Forest/McKean) to temporarily lift the public education mandate requiring professional development for certified school teachers and administrators (Act 48 of 1999) passed the state House today.

“House Bill 1363 would provide some long-overdue relief to the professional development mandate of which serious questions have been raised regarding whether our public school professionals and, ultimately, our children are truly benefiting from this multi-million dollar taxpayer-funded program,” said Rapp. “This legislation gives Pennsylvania school districts a cost-cutting strategy to balance their budgets and even less of an excuse to raise taxes on local property owners.”

Specifically, House Bill 1363 would grant a two-year moratorium on the 180 hours of continuing education required every five years for Pennsylvania public school certificate holders. However, the decision on whether to relax the continuing education requirement will be left up to local school districts.

Nothing in House Bill 1363 prevents public school teachers or administrators from continuing their education, but school districts would have the option of choosing not to pay for this program during the two-year moratorium. In addition, House Bill 1363 does not apply to any continuing education training deemed necessary by the Pennsylvania Department of Education or the federal government.

“Although passage of this legislation could represent more taxpayer savings in the final 2011-12 state budget, the purpose of this moratorium is to give local districts the extra level of flexibility necessary to address their most important fiscal priorities while still providing quality academic programs.” said Rapp. “House Bill 1363 is all about assisting our school districts to spend taxpayer dollars in a fiscally responsible manner in light of current economic reality.”

House Bill 1363 now moves on to the Senate for consideration. For the latest legislative updates, visit RepRapp.com.

Contact: Ty McCauslin
tmccausl@pahousegop.com
717.772.9979

HARRISBURG – Small businesses would have the option to pay their school property taxes in installments, under legislation sponsored by Senator Joe Scarnati (R-Jefferson) that passed the Senate yesterday.

“As a former small business owner, I know that it is sometimes difficult for these businesses to have the cash flow at a certain time to pay their school taxes in one lump sum,” Scarnati said. “This will allow these companies to spread out the payments a bit.”

Scarnati said that since 2006, with the passage of the Taxpayer Relief Act, certain property owners have had the option to pay school property taxes in installments, through farmstead and homestead exemptions. His bill would extend that option to businesses with 50 or fewer employees.

“In these tough economic times, I believe it is important to help our small businesses – which are the economic engines and job-creators in our communities,” Scarnati said. “This commonsense legislation will make it easier for small business owners to budget and pay their school taxes.”

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CONTACT: DREW CROMPTON: 717-787-7084

WARREN – Senate President Pro Tempore Joe Scarnati announced today that he is proposing a local impact fee on Marcellus shale companies to ensure communities affected by the drilling will have the resources necessary to address a wide range of local and state concerns.

“Since the beginning, I have felt that a majority of revenues from the industry needs to remain local, and this proposal clearly provides that parameter,” Scarnati stated. “A fee assisting those communities where the drilling takes place and where road improvements, water and safety enhancements are needed makes a tremendous amount of sense.”

Under Scarnati’s proposal, a portion of the revenue will also go to conservation districts, environmental clean-up projects, impacted State highway improvements, as well as hazardous site clean-up.

“While not all communities have Marcellus shale, it is my sincere belief that everyone will be impacted by this developing industry,” Scarnati added. “There is little question that the goal of this proposal is not only to help our local communities, but it is also to help protect our environment state-wide.”

“Pennsylvania has a tremendous opportunity with the Marcellus shale industry, but we must be vigilant in ensuring our communities and the environment are preserved now and in the future.” Scarnati said. “This is a common sense proposal, and it is a responsible first step in the state’s partnership with this industry.”

Download the Marcellus Shale Impact Fee Revenue Estimate Summary

Examples and Implications

Computation Example #1

  • Base Fee = $10,000 per well
  • Base Fee is adjusted independently for increases in production volume and price of gas
  • Assume new well with production of 750,000 Mcf over one year period and discern the applicable volume adjustment factor
  • Assume average price for natural gas = $4.25 per Mcf and discern the applicable price adjustment factor
  • Adjusted Fee = Base Fee x (VAF x PAF) = $10,000 x (.5 x 5) = $25,000

Computation Example #2

  • Base Fee = $10,000 per well
  • Base Fee is adjusted independently for increases in production volume and price of gas
  • Assume five-year old well with production of 150,000 Mcf over one year period and discern the applicable volume adjustment factor
  • Assume average price for natural gas = $4.25 per Mcf and discern the applicable price adjustment factor
  • Adjusted Fee = Base Fee x (VAF x PAF) = $10,000 x (.3 x 5) = $15,000

Revenue Projections

  • The estimated revenue to be generated from the fee far outpaces the revenue that would be expected under an Arkansas-style tax model
  • Preliminary estimates indicate that the fee revenue would approach the expected revenue received from a Texas-style tax model
  • Because of the retroactive feature, the fee is expected to generate $45 million from 2010 activity payable this year
  • The $45 million fee revenue attributable to 2010 combined with the expected 2011 fee revenue of $76.2 million will result in cumulative fees of $121.2 million being collected by March 1, 2012

Revenue Implications

  • A high-performing well, based on the amount of first-year volume, could pay a fee that is 40% higher than the expected fee due from an average-producing well
  • Based upon current prices and widely-accepted production projections, each well is expected to generate at least $160,000 in fees over a ten-year period
  • Using current prices, the fee is expected to generate at least $675 million over a five-year period
  • Recent data shows that prices are expected to increase from below $4.50 per Mcf currently to well over $5.00 per Mcf in the next several years. Such an increase could drive cumulative fee revenue to nearly $1 billion over the next five years
  • At current natural gas prices, the fee would generate approximately $76.2 million in 2011 and $103.2 million in 2012

 

Summary

Computation

  • Base Fee equals $10,000 (applies to horizontal/Marcellus wells only)
  • Base Fee is adjusted independently for increases in production volume and price of gas
  • Adjusted Fee = Base Fee x (Volume Adjustment Factor x Price Adjustment Factor)
  • Fee structure establishes a floor for expected revenues, but if production and/or prices move substantially higher, revenues will increase as well
  • Fee is self-prorating for partial years through the volume adjustment factor

Administration

  • The Pennsylvania Public Utility Commission (PUC) will collect and distribute the impact fee
  • The PUC will publish a twelve-month average price of natural gas on its Internet website for use in determining the applicable price adjustment factor for a calendar year
  • Fees will be due for calendar year 2010 activity and shall be paid in two equal installments on August 1, 2011 and October 1, 2011
  • The fees due for calendar years 2011 and thereafter will be payable on March 1st of the following year

Revenue Estimate

  • Estimate is calculated using industry average production per well and recent historical gas price of $4.50 or less
  • Estimate assumes 1,500 new wells per year beginning in 2011 and each year thereafter
  • The estimated revenue to be generated from the fee far outpaces the revenue that would be expected under an Arkansas-style tax model
  • Preliminary estimates indicate that the fee revenue would approach the expected revenue received from a Texas-style tax model
  • Because of the retroactive feature, the fee is expected to generate $45 million from 2010 activity payable this year

Three-Way Distribution of Impact Fee

(1) Majority of the Impact Fee for local governments to be deposited into a newly established Local Services Fund

The local Impact Fee revenue distribution between local governments shall be as follows:

* 36% to counties with producing unconventional gas wells

* 37% to municipalities with producing unconventional gas wells

* 27% to municipalities having no producing sites but located in counties with producing unconventional gas wells

The local Impact Fee revenue may be used for the following purposes:

* Reconstruction, maintenance and repair of municipal roadways and bridges

* Preservation and improvement of municipal water supplies

* Maintenance and capital improvements to municipal waste and sewage systems

* Preservation and reclamation of the surface waters of the municipality

* Other lawful purposes reasonably related to the health, welfare and safety consequences of severing natural gas in the municipality

(2) A portion of the fee dedicated to conservation districts statewide

(3) A portion of the fee utilized to address statewide environmental and infrastructure impacts to include funding for the following:

* Environmental cleanup projects distributed through the Commonwealth Financing Authority

* Water and sewer infrastructure

* Impacted State highway improvements

* Hazardous sites cleanup

Local Zoning

* Require the PUC to publish a model zoning ordinance that includes standards set forth in the bill

* Prohibit a municipality that adopts a zoning ordinance which exceeds the model from receiving funding from the local impact fee

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CONTACT: DREW CROMPTON: 717-787-7084

State Representative Kathy Rapp (R-Warren/Forest/McKean) has been appointed to serve on four House committees for the 2011-12 legislative session.

Rapp’s newest committee assignment is to the high profile and heavily active House Finance Committee, which is responsible for all state tax legislation, including personal income taxes, school property taxes and, most recently, proposals to tax the drilling of Marcellus Shale natural gas. 

“Having rejected six consecutive unsustainable Rendell state budgets and unapologetically voting against legislation to impose the largest job-killing, natural gas severance tax in American history, I am greatly looking forward to playing a role in moving the work of this committee in a fiscally conservative direction that puts Pennsylvania taxpayers first and excessive government spending last,” said Rapp.   “Whether it’s broad-based or otherwise, a tax increase is a tax increase, and an economic recession is the worst time for state government to take away and redistribute even more income from taxpayers, consumers, property owners or job-creating employers.”     

In addition, Rapp will return for her fourth consecutive term as a member of the House Education, Environmental Resources and Energy, and Veterans Affairs and Emergency Preparedness committees.  

“As a fourth-term legislator, I have again sought to become a member of precisely those committees where I feel I can make the biggest impact for the people I serve in Forest, McKean and Warren counties,” said Rapp.  “For example, as a member of both the House Education and Environmental Resources and Energy committees, I will continue to advance my legislation to create the Fuels for Schools and Beyond grant program.   This will provide local school districts with the necessary resources to convert their traditional heating systems to utilize biomass heating technologies to dramatically lower their energy costs.   In the even larger picture, promoting greater reliance on biomass products, such as low-grade timber, also will further sustain and create jobs in our local forestry and agriculture industries which remain critical to generating continued economic growth throughout Northwestern Pennsylvania.” 

For the latest legislative updates, visit RepRapp.com

State Representative Kathy Rapp
65th District, Pennsylvania House of Representatives

Contact: Ty McCauslin
tmccausl@pahousegop.com
RepRapp.com         
717.772.9979