The Associated Press November 2, 2011, 1:57PM ET

Pa. House panel OKs shale fee bill on party lines

Pennsylvania House Republicans on Wednesday passed a measure out of committee that would impose a local impact fee on natural gas drilling and establish new state regulations on the growing industry.

The 127-page bill, approved 15-9 in the Finance Committee along party lines, was patterned closely on an approach favored by Republican Gov. Tom Corbett. It also would fund environmental programs.

Committee Chairman Kerry Benninghoff, R-Centre, said the bill was "a collection of what can be passed in both chambers." A separate bill is under consideration in the Senate. Benninghoff said he expects a House vote on the bill before Christmas.

The proposed impact fee would allow counties to impose and collect up to $40,000 per well in the first year, $30,000 in the second year, $20,000 in the third year and $10,000 in years four through 10. The bill would establish regulations that pre-empt local zoning rules.

Rep. Phyllis Mundy of Luzerne County, the committee's ranking Democrat, said the fee will translate to about 1 percent over the 50-year life of a well, or about $160,000 for a well that produces some $16 million.

"We're calling this the Drill Baby, Drill Bill," Mundy said.

A quarter of the revenue would go to the state, split among the Pennsylvania Emergency Management Agency, the Office of State Fire Commissioner, the Health Department, the Department of Environmental Protection and the Transportation Department.

The other 75 percent would be retained locally: 37 percent to host municipalities, 36 percent to the county, and 27 percent to all municipalities in the county under a formula that takes into account population and highway miles. They could use the money, among other things, to fix or build roads and bridges, improve water and sewer systems, upgrade emergency preparedness, or cut taxes.

Rep. Kathy Rapp, R-Warren, said the boom in Marcellus Shale drilling has helped keep unemployment relatively low in her region.

"It's the life blood of a couple of the areas I represent," Rapp said. "Even where I live, the producers are willing to make concessions."

Another committee member, Rep. Bill DeWeese, D-Greene, said he voted against the bill because it should be studied in the House Environmental Resources and Energy Committee for a few weeks, and would prefer a higher revenue rate.

DeWeese called the 1 percent fee, far lower than in Arkansas, Texas or West Virginia, "a stunning, searing, incontrovertible factor in my negative vote."

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