Senate Approves Marcellus Shale Bill

The state Senate on Tuesday night 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 Sen. Joe Scarnati, R-Jefferson, who sponsored the measure.

Passage of Senate Bill 1100 comes after months of negotiation.

"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."

• SB1100 Distribution Estimates
• SB1100 Fee Estimates
• SB1100 Final Fee

Scarnati said his proposal would impose a tax rate of approximately a 3 percent on gas production—retroactive to 2010—which will 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 that 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.

Reached Tuesday night, , D-Canonsburg, said that while the bill wasn't perfect, it was a good first step.

"This was the first sept in getting to a final bill. The Senate bill was amended yesterday and becae a lot beter than it first was. It had a joint uniformity provision that all the local municipal organizations approved. It didn't have everything I wanted, but it is a good first start," he said.

Solobay added that the amendment gives more regulatory control to muncipalities.

"There are going to be more safety pieces in the end that will also include compressor and processing stations," he said. "It improves vastly over what it started out as. I don't know what the House bill looks like yet, but we can't just sit back and do nothing. The conversation needed a start."

This story originally appeared on Canon-McMillan Patch.