- Associated Press - Tuesday, June 28, 2011

HARRISBURG, Pa. — A proposal to impose a levy on Pennsylvania’s booming Marcellus Shale natural gas extraction will be debated on the floor of the state House of Representatives, a Republican spokesman said Tuesday, but Gov. Tom Corbett warned he plans to veto whatever might pass.

The fight is one likely to be replicated in other states as cash-strapped governments look to the booming shale oil market as a way to replenish their coffers without driving away investment.

When drilling companies began flocking to Pennsylvania several years ago to exploit the Marcellus Shale formation, which is considered the nation’s largest-known natural gas reservoir, they were largely working under laws from the 1980s that never envisioned deep-drilling activity that is combined with high-volume hydraulic fracturing, or fracking, and the recent innovation of horizontal drilling underground.

So far, the state legislature has done little to change that, other than pass a bill to require faster public disclosure of well-by-well gas production data from Marcellus Shale wells and debate the merits of a tax on gas extraction.

Republican caucus spokesman Steve Miskin said the debate would likely be in the form of amendments to a Senate-passed bill concerning hazardous site cleanups.

“Everybody’s going to vote their district, and they’re going to vote how they vote,” Mr. Miskin said. “There’s no direction.”

The main amendment, by Rep. Dave Reed, Indiana Republican, would assess a fee on Marcellus Shale wells of $50,000 in the first year, $25,000 in the second and third years, and $10,000 a year for the next seven years.

The money would be collected and distributed at the county level, with 37.5 percent going to the host counties, 25 percent to host municipalities, 17.5 percent to all municipalities within a host county and 10 percent to conservation districts. The final 10 percent would go to host counties strictly for use by first responders and emergency medical services.

Mr. Reed serves as the House Republicans’ policy director, a leadership position.

State House Democrats do not support the Reed amendment, said Bill Patton, spokesman for Minority Leader Frank Dermody, Allegheny Democrat. He called it an effort by Republicans to cover themselves in the face of public support for an extraction tax.

“The money it raises is inconsequential over the life of a well,” Mr. Patton said. “We’re talking on the order of 1 percent or less as an effective tax rate.”

He also noted the amendment would repeal the Hazardous Sites Cleanup Act, a 1988 law that funds environmental programs, including Pennsylvania’s share of the federal Superfund program, and pays for investigations of illegal hazardous waste disposals and methamphetamine labs.

Mr. Corbett, on his way to sign a bill to alter how liability is apportioned for civil lawsuits, told the Associated Press he would veto anything that passes until a panel he appointed reports to him with recommendations, which are expected next month.

Asked why House Republicans were taking up the measure despite his veto threat, the governor said: “Ask them.”