Responsible Drilling Alliance Newsletter
Februrary 2nd, 2012
Dear RDA Members,
Minus a last minute miracle, an incredible shift in the course of the future of Pennsylvania is about to occur. With the Governor set to unveil his version of the budget on Tuesday, it is crunch time for gas development legislation. Senate and House Republican leaders are furiously pushing to get a deal done and out of the way before having to focus on the budget.
Unlike the other 38 states that produce NG and impose a severance tax, here in Pennsylvania we are witnessing the spectacle of our legislature compromising over a woefully inadequate “impact fee” rate to place on a commodity that managed to jump 10% in price in just a few days last week.
The opportunity to set ourselves up for much-needed, imaginative fiscal opportunities from an industry that brings with it huge changes to our landscape and lives – not to mention the risk of air and water quality degradation and perhaps eventually, our health – is slipping away without more than a dim murmur from the very few citizens who are paying attention.
The Governor and the majority of legislators have bought into gas industry fear tactics, warning us of the risk of industry economic retaliation by taking holding our ground for rightful share off the table. They ignore the reality of the billions already invested here and what our close geographical proximity to major markets, including industrial, heavily populated Ontario, means for the profitability of Pennsylvania’s shale gas.
They ignore the rationale behind strategic corporate moves regarding tying up leases, drilling, fracing, pipeline and infrastructure projects and delivery contracts, among the 80-some drilling operators in our midst. In the meantime, the industry’s operational free-for-all is leading to a tremendous supply glut and the downward trending price drop for NG everywhere in the country.
Perhaps someday we’will have an administration and a legislature that will make up for lost revenue during the Corbett era with a reasonable severance tax (a tax imposed by the state for the extraction of its natural resources to be used out of state ) with a percentage rate similar to that of ragingly red state Alaska (22.5%), or at least that other bastion of liberalism, Texas (7.5%).
Until then, it is not too late to focus on what is possible, and attempt to persuade our Republican friends to come to their senses, return to their conservative roots, and halt the assault on municipal rights in the current legislation. As most who follow the news out of Harrisburg are aware by now, the Governor and Republican legislative leaders have been pushing the gas industry’s agenda to require oil and gas operations be a permitted use in all zoning districts in every municipality. In addition, proposed legislation in both the PA House and Senate would give the Attorney General the power to review a local zoning ordinance for “reasonableness” if a well operator or an individual challenges it.
The former is too outlandish an intrusion to need commentary here, but 84th District State Rep. Garth Everett recently explained why the latter, the so called “preemption” law, has gotten support. He wrote, “The reason for the desire for limits on what local municipalities can do is that some municipalities have already passed ordinances which ban gas development in the municipality. That is totally contrary to the Municipal Planning Code (MPC) and zoning law in general. The goal of the legislation, as far as most of us are concerned, is to allow reasonable development and afford reasonable local control …”.
If Representative Everett is correct on the reasoning of the administration and their cohorts, it appears to be a huge overreaction at best. Once again, masterful gas industry PR initiatives, lobbyists and our own short sighted business boosters are running circles around our elected officials, our gullible media and those normally protective of local control of their community’s destiny.
Ordinances to ban gas drilling outright, such as those advocated by of the Community Environmental Legal Defense Fund (CELDF), are clearly illegal under existing law. Such bans, adopted by the Pittsburgh City Council and other communities where drilling in unlikely to occur, are designed to ultimately end up in the U.S. Supreme Court to challenge the concept of corporate personhood. The industry has yet to take the bait here in PA, and won’t, as long as these initiatives occur where it isn’t worth the risk. And CELDF is not getting traction in communities with extractable gas and the required space to develop the infrastructure needed to get it to market. That fact isn’t about to change unless a large majority of a municipality’s residents can persuade local officials to forgo the monetary promise of gas and take on the cost of a likely legal challenge.
The gas industry’s Marcellus Shale Coalition CEO Kathryn Klaber laid the groundwork for our legislative nightmare when she testified before in Governor’s Marcellus Shale Advisory Commission in May of 2011. Klaber complained to Commission members that well operators were having difficulty navigating the zoning ordinances in 1,491 municipalities where shale gas drilling is likely.
Klaber neglected to add that a great number of those communities have no zoning ordinances at all. In November, she switched tactics when she issued this statement, “The establishment of a predictable framework of heightened health, safety, and environmental protections will benefit all Pennsylvanians, particularly those residing in nearly half of the [commonwealth's] communities in the Marcellus fairway without formal zoning rules…”.
Klaber’s credibility on health and environmental protections was shot long ago, with her frequent pronouncements on what her employers think is best for all Pennsylvanians. Communities that want to hold certain of their zoning districts free from some or all gas operations should not be denied the decision. If they overstep their bounds, we already have a judicial system in place.
True, when compared to the hopelessly outdated PA Oil and Gas Act, there are setback improvements in the proposed legislation. But how were these new setback distances derived, other than what Klaber and company have decided they can live with? Where is the sound science Corbett so often talks about? Since people’s health, safety and environment in un-zoned communities need “heightened” protections from this industry, why has it taken so long, and where was the DEP?
Leased landowners need protection from undue industry influence in other ways, as in a legislative proposal by Representative Everett that has yet to gain traction which would void (cause to be re-written), predatory leases that placed the burden of government imposed charges on their share of royalties and not the well operator’s.
By now landowners must surely recognize the arbitrary nature of when their property may host a producing well. Community decisions on the placement of various drilling operations is a much lesser impediment to ultimately receiving royalties than market and infrastructure realities. The gas industry is full up of clever and motivated people. Give them restrictions that maximize good outcomes for the vast majority of all Pennsylvanians, and not just that small percentage directly benefitting from gas operations, and they will figure out a way to produce more than enough gas.
It is understandable why the industry tries to impose their desires to do business their way upon our Commonwealth, but that doesn’t mean we have to perform a legislative lapdance for them.
With horizontal wells already being drilled out as far as 8400 feet, and no limit yet in sight, there ought to be enough willing properties on which to put a well pad to keep operators busy for a long time to come, maybe long enough for concerned communities to acquire the necessary information needed to figure out just what health, safety, environmental, and economic protections are needed for their residents. Until then, tampering with local decisions is an endeavor those legislators with active consciences need to rethink.
Place a call and read your legislator the riot act. From the Governor’s office to the halls of the General Assembly, those in control have done enough succumbing to gas industry seduction, threats and bullying. It’s time they act with a visionary look to the future of Pennsylvania instead of a fear based reaction today.
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