- Associated Press - Monday, July 13, 2020

HARRISBURG, Pa. (AP) - New legislation to extend millions of dollars in tax breaks to turn natural gas into fertilizer and other chemicals won approval in Pennsylvania’s Senate on Monday, barely hours after the measure emerged from closed-door negotiations between Gov. Tom Wolf and top Republican lawmakers.

The tax credit legislation had high-profile support from the Pennsylvania Manufacturers Association, the state’s huge natural gas industry and building trades unions, traditional Democratic allies that are a growing force for gas industry projects.

The bill passed, 40-9, and will go to the House of Representatives, which overwhelmingly approved a similar version before Wolf vetoed it earlier this year.

Wolf, a Democrat, has agreed to sign this new legislation, Senate Majority Leader Jake Corman, R-Centre, and Sen. John Yudichak, I-Luzerne, told senators during floor debate on the bill.

Wolf gave no such assurances publicly, but said through his office that he had negotiated it to ensure that the tax credit is “aligned” with the benefits and that construction jobs at the facilities are paid prevailing wage rates.



Starting in 2024, the new legislation authorizes 25 years of tax credits up to almost $26.7 million a year, to be divvied up among no more than four facilities that each can draw a maximum credit of just under $6.7 million. That totals almost $670 million.

The facilities must meet a capital investment requirement of $400 million and 800 jobs, including construction. The bill is a particular achievement for unions, guaranteeing the facilities that get the tax credit pay union-scale wages for construction.

Northeastern Pennsylvania lawmakers see the bill as being of particular value, touting the prospect of reindustrializing a region that has seen its steel and coal industry wither.

The region’s plentiful supply of dry natural gas can be turned into fertilizer, ammonia, diesel exhaust fluid and other chemical products that are in demand in Pennsylvania and across the northeastern United States, backers say.

The tax credit program, Yudichak said during floor debate, “sets the stage for unprecedented economic growth across a wide swath of industries.”

The bill bears similarities to a 2012 state law that was designed to lure a multi-billion dollar Shell ethane refinery now under construction in western Pennsylvania’s Beaver County.

Opponents, including southeastern Pennsylvania Democrats and environmental advocacy organizations, decried the bill as an unnecessary giveaway to the natural gas industry that could have been better spent elsewhere.

The legislation underwent no analysis to determine its potential impact to the environment or public health in a state that has been devastated by fossil-fuel development, Sen. Katie Muth, D-Montgomery, said.

“This is not a pathway forward for Pennsylvania that is sustainable, nor is it healthy,” Muth said during floor arguments.

Wolf earlier this year vetoed similar legislation after it passed both Republican-controlled legislative chambers by veto-proof majorities. The bill was never the subject of a hearing and Wolf contended that it had not been negotiated with him.

Still, Wolf, who has long pledged to help the natural gas industry get its product to market, said he could support that type of subsidy, with the right parameters.

The new version puts limits on how much each facility can reap in tax credits and the number of facilities that can qualify, and it carries wording to ensure facilities comply with a requirement to pay prevailing wage rates.

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Follow Marc Levy on Twitter at https://twitter.com/timelywriter.

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