Julie Grant / The Allegheny Front
Deciding what happens on private property might seem like a basic right. But when it comes to fracking, Ohio and other oil and gas-producing states have laws that can force landowners to lease their underground mineral rights to energy companies.
That’s what happened to Patrick Hunkler and his wife, Jean Backs. It began in 2010, when a landman for an energy company knocked on their door.
Hunkler didn’t know much about fracking then. The landman offered them $137 an acre for the mineral rights under their 21 acres in Belmont County, in eastern Ohio.
“$137 dollars, that’s probably the closest I ever came to signing a lease,” he said.
But they held out. By 2014, they were offered $8,500 an acre.Concerns for water
Jean Backs was getting ready to retire. After 30 years working for the Ohio Department of Natural Resources (ODNR), the money might have been nice. But, she worried about the millions of gallons of water used to frack each well, and the waste it creates.
“My big concern about signing a lease would be where’s that water going to come from and then what will happen to it when they’re finished,” she explained. “You can’t know that at the time that you signed a lease.”
Still, her husband, who had worked for the Ohio EPA, and built a passive-solar house with recycled materials, was open to the idea. But he wanted a way to assure a lease would take into consideration his environmental concerns, including the bright lights used at well pads.
“This is a beautiful dark sky out here,” he said. “If there is a well pad down the road, it’s just like Hollywood.”
Listen to the story:https://www.witf.io/wp-content/uploads/2019/06/AF062119_JG_Unitization.mp3
And landmen pursued Hunkler and Backs like celebrities, making hundreds of calls to the family.
“We would express our environmental concern, the only thing that they could offer us was money – a price per acre, and royalties,” he said.
But making money wasn’t as important to the family as protecting their environment. They say landmen called them foolish. They went as far as following them on vacation, even threatening to bring the sheriff over to force them to sign.
Backs said she felt harassed.
Then in 2017, they got a notice from ODNR that Chesapeake Energy was seeking to unitize their property. That meant the state could force the family to sign a lease under a state law.An old Ohio law meets fracking
“We normally think of the rights of the landowner as being things like the right to decide what’s done with your land. Or what’s not done with your land,” explains Heidi Robertson, a professor of law and environmental studies at Cleveland State University. She published a law review article in 2018 about Ohio’s unitization law.
The law, passed in 1965, was to ensure the efficient extraction of oil and gas. Before, landowners used to set up wells all over their land, without regard to their neighbors. But, too many wells so close together adversely affected the underground pressure that allowed the oil and gas to be extracted.
So the law requires the land for a well to be a certain size and shape. For shallow wells, that was an acre.
The law didn’t get much use until the fracking boom. Nowadays, wells snake horizontally for miles, deep beneath the ground. According to industry experts, most land units in Ohio today range from 300 to 1,100 acres.
Robertson says one unit of land can have hundreds of different landowners.
“Then you have to have the agreement of all of the landowners in order to cobble together the rights to drill,” she said.
The problem for energy companies and for people who want to lease their land comes when other landowners in the unit, like Patrick Hunkler and Jean Backs, say no to drilling.
“It’s almost like a veto, a single landowner being able to veto the ability of all the surrounding landowners to drill,” Robertson said.
Under the law, if a company gets 65 percent of landowners in a unit to agree to lease their mineral rights, it can apply to the state to unitize the rest, forcing dissenting landowners into leases.
Since 2011, the chief of ODNR’s Division of Oil and Gas Resources Management has approved 144 forced unitizations.Voluntary leases?
Energy companies offer up-front bonus payments and royalties as a carrot to get landowners to sign leases. Robertson says the unitization law also gives companies’ landmen a stick.
“They come in and say things like ‘We’re offering you X amount of money.’ They’ll in fact say if you refuse to, quote, volunteer, you’ll be forced through this administrative process through the state, and it will cost you more.”
Still, energy companies try to avoid unitization, because the state fees, $10,000 to unitize a landowner, and attorneys fees can add up. ODNR also requires continued efforts to negotiate with holdout landowners.
Around the Hunklers, one neighbor who leased his land to Chesapeake was fine with it. The signing bonus meant he could take time off work for his back surgery.
But down the road, Jos Miller said he would have been better off without leasing to Chesapeake. He’s an Amish farmer with horses and sheep, and seven children. He teared up when describing what happened. He said he shouldn’t have admitted to the landman that he couldn’t read or write.
“I was desperate,” he said.
Miller leased his 170 acres for $50 an acre. But he later found some of his neighbors were getting as much as $6,000 per acre.
“I like to be fair so but I guess the world don’t work that way anymore,” he said. “It’s whoever got the most who’s the smartest to wiggle it around.”A Columbus hearing
When companies can’t get landowners to sign leases, they can ask the state to step in.
Every month, the Division holds multiple unitization hearings like one in Columbus on May 15. Ascent Resources applied to unitize landowners who have refused to sign a lease. The company brought a geologist, an engineer, and a landman to testify, along with a slew of attorneys.
At the hearing, in front of ODNR staff, the landman details efforts to locate unleased landowners, and get them to sign. The company engineer testified that Ascent’s project is a $20 million investment. Without those last, unleased tracts of land, the company would lose the ability to collect enough gas for the project to be financially viable.
“That would likely be the difference between what we would pursue vs what we would not pursue,” testified Ascent Reservoir Engineer Taylor Henderson.
The profitability of the project is the only factor the state can consider in unitization hearing.Profits over landowner rights?
Megan Hunter, of Fair Shake Environmental Legal Services in Akron, who represented Hunkler and Backs in their case, calls the law unjust.
“I think you have constitutional problems where the reason you’re taking it is because it’s more profitable than not for a private company to develop those resources. So at that point you’re not doing an evaluation of whether there is a public benefit.”
At Chesapeake’s unitization hearings against his family, Patrick Hunkler asked the state to also consider his environmental concerns. But transcripts from the hearing confirm that ODNR told him they had no authority to do that.
“Hey ODNR, we have concerns about our natural resources. Who can we talk to? They didn’t listen to us in the hearing,” he said.
Chesapeake declined an interview request.
Hunter says the process is stacked against landowners. The state has never ruled against an energy company in a unitization hearing.
“It is just so clear that [the company] is really well represented and the government is often aligned with them in these administrative forums and the citizen is left to fend for themselves,” she said.
ODNR did issue orders for Chesapeake to unitize Hunkler’s property. But after constructing the well pad nearby, the company abruptly sold all its Ohio assets and the unitizations were dissolved.
Now, Hunkler and Backs, along with their neighbors, wonder what will happen with the next company.
This is part of the series, “Who’s listening?” examining claims made by Ohio residents, and how state regulators have responded, supported by the Fund for Investigative Journalism and the Sears-Swetland Family Foundation.
The move comes as the city of Philadelphia seriously considers a ban on single-use plastic bags.
Emma Lee / WHYY
Investigators from several agencies say the site of the Philadelphia Energy Solutions refinery explosion and fire remains unsafe.
Kristen Kulinowski, interim executive of the Chemical Safety Board, said the area is not structurally sound and is off-limits. The CSB is an independent federal agency investigating why and how the explosion happened.
Kulinowski says she’s been told the area is “full of twisted metal and debris scattered” at the site. She says vapor was released early Friday morning, followed by several explosions. The ignition source remains unknown.
“There’s an adage in the industry that a flammable vapor outside of its containment will find an ignition source,” she said. “You can’t control an ignition source. So you have to control the vapors.”
She said anything could have touched it off, including other equipment or a vehicle.
The CSB has investigated a dozen incidents at refineries in the last 20 years.
“Refining is a high-hazard industry,” Kulinowski said. “These hydrocarbons are flammable and explosive and that’s why the safety management systems are in place to help prevent their unintentional release.”
Issues surrounding the use of the highly toxic hydrogen fluoride will be part of the investigation. It was not released, but if it had been, it could have traveled into surrounding neighborhoods and caused serious injuries and even death.
The CSB will also be looking at the long history of the facility as part of its investigation, which could take up to 18 months. The agency will issue recommendations intended to prevent future explosions from happening.
“We will look at the technical, human and managerial factors that led to the incident,” she said.
Several weeks prior to the explosion, the agency sent a letter to EPA recommending an examination of alternatives to hydrogen fluoride. Refiners currently use either hydrogen fluoride or sulfuric acid as catalysts in the process of turning crude oil into gasoline. The EPA has yet to respond.
Pennsylvania’s impact fee on natural gas producers raised more money in 2018 to offset the effects of shale development than at any time in the fee’s seven-year history, the Public Utility Commission said on Thursday.
The fee raised almost $252 million for the year, up from $210 million in 2017 and $226 million, the next-highest figure, in 2013.
The PUC said the higher revenue was mostly driven by an increase in the number of wells paying the fee: 9,560 in 2018 compared with 8,518 in 2017.
The total was boosted by the inclusion for the first time of so-called stripper wells, low-producing wells that were excluded from the impact fee calculation because of a legal dispute. They are now subject to the fee following a ruling in December 2018 by the Pennsylvania Supreme Court, which agreed with the PUC that the wells must pay the fees. Revenue from stripper wells accounted for $8.9 million of the 2018 total.
“Because of the unique circumstances surrounding this issue, and the potential financial impact on municipalities where the disputed wells were located, the commission felt it was important to thoroughly calculate the stripper well collections and allocate the corrected well distributions to the municipalities that did not receive those impact fees during the years the well status had been disputed,” the PUC said in a statement.
Of the latest total, $135 million will be paid to counties and municipalities that are directly affected by gas drilling. The authorities spend the money on projects including emergency preparedness, storm water systems and water preservation, with the aim of benefiting from the development of Pennsylvania’s Marcellus Shale, whose abundant gas reserves have been exploited by hydraulic fracturing since the mid-2000s.
Among counties, about half of the money was spent on emergency preparedness and public safety in 2016, the latest year for which a spending breakdown is available. Towns spent the biggest portion, about half, on public infrastructure that year, the PUC said.
The fee, one of a wide range of gas industry regulations imposed by the state’s Act 13 in 2012, depends on the age of a well and the market price of gas, which has been little changed at less than $5 per btu since 2014, according to futures prices quoted on the New York Mercantile Exchange.
The fee is payable for 15 years, and can range from $60,000 in the first year of a well’s life to $5,000 in the 15th year, according to the Marcellus Shale Coalition, a trade group.
In a statement, the Coalition welcomed the fee as a boost to communities. “Unique to our state, Pennsylvania’s impact tax continues to be a winning policy solution for the Commonwealth,” it said.
About $90 million of the latest total will be paid into the Marcellus Legacy Fund, which supports shale-related projects such as highways and sewers statewide, while another $18 million will go to state agencies specified by Act 13.
Since its inception in 2012, the fee has raised about $1.7 billion for communities across Pennsylvania.
Pennsylvania is the only gas-producing state to charge an impact fee rather than a severance tax, which would be levied on the amount of gas produced. Gov. Tom Wolf, a Democrat, has repeatedly proposed a severance tax he says would raise badly needed revenue for education and other items, but he has been rebuffed by the Republican-controlled legislature. His current proposal is to use a severance tax to pay for $4.5 billion in infrastructure improvements.
The American Petroleum Institute of Pennsylvania, an affiliate of the national trade group, defended the impact fee and reiterated its opposition to other possible ways of taxing the gas industry.
“Today’s report makes it clear, rather than rerun the same counterproductive ideas that enact additional taxes and risk losing revenues reported today, we should support legislative policies that balance what is working to support the commonwealth and build on Pennsylvania’s successes,” the trade group said in a statement.
The counties receiving the most impact fee money in 2018 were Washington, Susquehanna and Bradford, with $8.4 million, $7.2 million and $6.2 million, respectively. Among municipalities, the top recipients were Center and Morris townships, both in Greene County, followed by Amwell in Washington County. Each received about $1 million.
Among energy companies, the largest impact fee, almost $33 million, was paid by Range Resources, the dominant driller in southwest Pennsylvania, followed by EQT and Cabot Oil & Gas, the PUC said.
The New Jersey legislature approved a budget bill this month that would send the Delaware River Basin Commission $200,000 less than the state promised. It’s the latest decision that could slow the commission’s work further as it continues operations with millions of dollars in shortfalls due to unmet pledges from three member states and the federal government.
The DRBC is an interstate agency tasked with overseeing water use and water quality in the Delaware watershed. That includes managing the flow to make sure there’s enough clean drinking water for more than 15 million people in Delaware, New Jersey, New York, and Pennsylvania.
New Jersey is not the only partner that has been shortchanging the commission. For two years straight, Pennsylvania provided $217,000 in funding, when it was expected to contribute $893,000 per year. New York has coughed up only half of its expected contribution for the past five years. Delaware is the only member state that has consistently contributed its full portion of the agency’s annual budget.
The federal government has not contributed a single dollar to the commission since 2010, despite its tacit agreement in 1988 to provide 20 percent of the DRBC’s annual budget. The cumulative federal shortfall totals more than $14 million.
Peter Eschbach, director of external affairs and communications for the DRBC, said in an email that the commission has continued to carry out its regulatory function in regards to project review, water quality, and water allocation. However, the lack of funding has kept the agency understaffed, slowed reviews of future water resource needs, and prevented it from making infrastructure improvements.
The DRBC went from having 46 employees in 2000, to 39 employees in 2015, and now has 33 people listed on its staff page. Vacant positions include a water resource specialist, an administrative assistant, and a geologist.
Tracy Carluccio, deputy director of Delaware Riverkeeper, called the gaps in funding a chronic problem for the agency.
“It leaves the commission to look for other sources of funding in order to be able to operate, which takes important time away from the work they should be doing,” she said.
Carluccio pointed to the agency’s inaction over the possible adoption of a fracking ban in the watershed.
“They have been spending a year and a half reviewing the public comments that were submitted,” she said. “The DRBC needs to make that decision, and that decision has been delayed because of lack of resources.”
The DRBC might get closer to its full operating budget in 2020. In May, the governors of Delaware, Pennsylvania, and New Jersey signed a proclamation saying they would work together to protect the Delaware River watershed and press for more federal support.
Tom Wolf’s proposed 2020 budget includes $1,047,000 for the DRBC, which is $150,000 more than the state is expected to contribute.
Even though the New Jersey budget bill waiting on Gov. Phil Murphy’s desk falls short, Assemblywoman Carol Murphy is introducing a supplemental bill that would appropriate the missing $200,000 to the commission.
The federal government, however, does not show any signs of funding the DRBC next year — the line item is absent from President Trump’s proposed 2020 civil works budget for the Army Corps of Engineers.
Sandra Meola, director of the Coalition for the Delaware River Watershed, said the DRBC’s funding gap has flown under the radar for a long time. The DRBC is “critically important for habitat management, waterflow management, and clean drinking water,” Meola said. “They’re really the only interstate agency responsible for it.”
The coalition is advocating for each signatory, including the federal government, to provide its full share of funding.
“I think between the coalition and DRBC educating legislators, we’re going to get there,” Meola said.
The explosion and fire took a day and a half to extinguish and destroyed the unit that turned crude oil into gasoline. Four employees were hurt.
A coalition of sixteen environmental groups sent open letter to Governor Tom Wolf and legislators Tuesday decrying the transfer of approximately $10 million out of Pennsylvania's Environmental Stewardship Fund.
Philadelphia, state and federal officials gathered Tuesday to assure city residents that the refinery explosion and fire that occurred Friday at the Philadelphia Energy Solutions complex did not result in any threats to the public health.
The city plans to form a working group that would include officials, residents, environmentalists, workers, and PES management to address issues at the plant. Managing Director Brian Abernathy said a public meeting will take place at the end of July.
“This incident sharpened a number of questions around the refinery,” Abernathy said. “Is the refinery safe? Does PES have appropriate measures in place to prevent a catastrophic failure? Was our response and the response of PES adequate and appropriate?”
Abernathy said fears that the dangerous chemical hydrogen fluoride could have been released will also be addressed, as well as the financial health of the plant. PES emerged from bankruptcy last year, but it has struggled to compete due in part to changing economics of the source of its crude oil from the Bakken Shale fields of North Dakota and the requirements of the Renewable Fuel Standards.
The explosion of liquefied petroleum gas at the PES refinery sent a fireball into the air and black smoke billowing across the region.
But Philadelphia’s deputy health commissioner, Caroline Johnson, said the windy day helped clear the air of any pollutants that could have affected city residents.
“Based on aggressive sampling of air quality in the region of PES, we found nothing of concern, and we see no evidence that there’s been an impact on the health of the public in Philadelphia.”
Johnson said she could not speak about the potential impact in other parts of the region. Officials from the Pennsylvania Department of Environmental Protection, the federal Bureau of Alcohol, Tobacco and Firearms, and the city’s Fire Commissioner Adam Thiel agreed the fire and its aftermath did not pose a public-health threat.
Johnson said inspectors with the city’s Air Management Service have conducted a number of tests both at its monitoring stations, as well as bottling air in the vicinity of the refinery to test for 61 potential pollutants.
“They’ve been doing very aggressive monitoring,” Johnson said. “They’ve been doing daily inspections in the community and along the fenceline of the PES to look for hydrogen sulfide, hydrocarbons and carbon monoxide.”‘No new information to share’
Missing from the news conference was a representative from PES. Company spokeswoman Cherice Corley released a statement Tuesday afternoon saying that a thorough investigation was continuing and that there was no new information to share.
Mayor Jim Kenney promised residents and workers at the refinery that the city is committed to ensuring the safe operation of the plant.
“I do believe that there is room for improvement,” he said, “both in the operation of the refinery and in the communications to residents.”
Residents have been calling for the refinery to be shut down, citing decades of poor air quality and lack of response from the company.
Although Friday’s fire may not have resulted in poor air quality, the refinery is the largest single source of air pollutants and greenhouse-gas emissions in the city. The plant released 3,218,080 metric tons of carbon dioxide or its equivalent in 2017. Over the past five years, PES has paid $649,417 in penalties for violating the Clean Air Act, $150,000 for violations related to the Clean Water Act, and $100,000 for hazardous-waste issues.
In the previous three years, the site has been cited for Clean Air Act violations in nine of 12 quarters. It has not been in compliance with the Clean Water Act for any of the past 12 quarters. Some of the releases listed under the Toxic Release Inventory for 2017 include volatile organic compounds such as toluene and benzene, as well as ammonia, lead compounds, and sulfuric acid.
Fire Commissioner Thiel said his department continues to have a strong presence at the refinery during the investigation, which he said “will take a very long time.”
Along with the city’s fire marshal, DEP and ATF, the Chemical Safety Board and the Occupational Safety and Health Administration are investigating.Voices raised in protest
On Tuesday afternoon, about 40 protesters from grassroots community groups gathered in front of the refinery, at one point spanning the width of Passyunk Avenue and bringing traffic to a standstill as they shouted their demands.
South Philadelphia resident Sylvia Bennett, a member of Philly Thrive, which organized the protest, was among them. She felt her bed shake when the explosion occurred around 4 a.m. Friday and thought she was hearing firecrackers. She said she and her neighbors are fed up with the health risks the refinery brings to her neighborhood.
“Enough is enough,” Bennett said. “I want them to shut it down or change [from] fossil fuel.”
Ryan O’Callaghan, president of United Steelworkers Local 10-1, said calls to eliminate the refinery were rash and did not account for the 1,000 or so workers the refinery employs.
“Those who are calling for the refinery to be shut down, I don’t think they realize the amount of people that rely on this refinery’s operations for part or all of their salary,” O’Callaghan said.
As for the safety of the facility, O’Callaghan said that he wants any repairs to make the work environment safer, but that he hasn’t felt at risk while on the job.
“If we felt it was unsafe, we wouldn’t be here,” he said. “Our members are in the refinery every day. We don’t want anything to get out of the pipes or anything like that. We’re the first line.”
Some at the protest acknowledged the need for a thoughtful transition at the refinery that would account for those who rely on it for their livelihood.
“Where are the people who work here now going to work? How are they going to have good jobs?” said West Philadelphia resident Noah Winer, who attended the protest with his wife, Sarah, and 3-month-old son, Amos.
“But it doesn’t make sense to maintain this just because this is where some people work. Those people should have jobs, but it doesn’t make sense to me to endanger the whole city, including the workers, by continuing to operate an oil refinery right in the middle of one of the biggest cities in the country.”
Winer said the impact of the explosion could have been far worse, which makes him concerned for the safety of his son and other children who live closer to the refinery.
“In a lot of ways,” he said, “we’re here for him.”
Emily Pontecorvo contributed to this report.
When Tom Wolf first ran for governor in 2014, he called for a severance tax on natural gas drilling. After he was elected, he pushed for one in every budget — without success.
This year, he’s trying a new tactic. He’s proposing $4.5 billion worth of infrastructure initiatives over four years.
The state would borrow the money for projects and pay the debt back over a long time — up to 20 years.
Unlike in past years, this severance tax plan is separate from the budget process.
Here’s what you need to know about the proposal and why Wolf thinks — this time — it won’t be pushed off into “never-never land.”Why the new approach?
During a recent interview on WITF’s Smart Talk radio show, Wolf said the new approach addresses concerns that the severance tax money would be folded into the general fund and lead to “a ratchet up of spending that government has a reputation for doing.”
Joanne Cassaro / WITFHow high would the tax be?
The rate of the severance tax would vary based on the average annual price of natural gas.
It could be as low as 9.1 cents per thousand cubic feet of natural gas extracted and as high as 15.7 cents per thousand cubic feet.
The Wolf administration has estimated that the effective rate of the severance tax would be about 4.5 percent in the first four years. And combined with the existing impact fee, the effective rate would equal about 5.9 percent.How much would it cost to borrow the money?
House Speaker Mike Turzai, an Allegheny County Republican who opposes Wolf’s proposed severance tax, said the plan will likely lead to at least $6.5 billion of new debt because of interest payments required to borrow the money.
During a statewide radio interview hosted by Keystone Crossroads, Wolf said he didn’t have an exact figure for how much the interest would cost.Where would the Restore PA money go?
The Wolf administration has broken the funding down into main areas.
- Mitigate flooding;
- Expand broadband;
- Address blight;
- Remove polluting or poisonous substances from schools, drinking water and other places;
- Green infrastructure;
- Transportation projects;
- Business development, including for the last few miles of natural gas utility lines that connect to manufacturing and industrial sites.
Wolf says how the money is used will depend on the needs of each community.
But Wolf said it’s worth borrowing the money, and thus paying the interest costs, because of the benefits.
“The question is how much are we going to pay for not preventing floods?” Wolf said. “…What’s the opportunity cost for not having kids who have access to the internet?”Why the Republican House Speaker doesn’t like Restore PA
Associated Press / Matt Rourke
Here are some of his arguments.
- The tax would make natural gas more expensive to produce and deter fracking in Pennsylvania. The industry has created tens of thousands of jobs and led to savings for residential customers who buy natural gas, Turzai said.
- The debt is a problem. Turzai said the plan would create a “debt-financed slush fund to be allocated at the whim of a new government board.”
- Spending money on infrastructure, rural broadband, stormwater management and brownfield cleanup are worthy projects. But he said, when it comes to broadband, “we do take issue with subsidizing multi-billion-dollar corporations to deploy technology using money from taxpayers.”
What are Republican proposing?
In the state Senate, two Republicans from southwestern Pennsylvania have proposed what they call an alternative way of paying for important infrastructure projects:
“This is in no way putting a drilling rig in the middle of a forest,” said Republican Camera Bartolotta in a story reported by WITF’s Katie Meyer. “Three miles away, these things can be done. And it’s 6,000 feet underground.”
Wolf opposes the measure from Bartolotta and Republican Pat Stefano. In 2014, then-Governor Tom Corbett, a Republican, advanced a similar idea, which his administration called “non-impact” drilling. It was controversial and ultimately did not result in any new leasing or revenue to the state.
Marie Cusick / StateImpact Pennsylvania
In the House, Turzai and other Republicans have proposed “Energize PA” — what they call a package of pro-growth, pro-jobs legislation that will raise money by growing the economy.
Wolf said Energize PA wouldn’t raise the $4.5 billion dollars that his plan would.Why some environmentalists don’t like Restore PA
They don’t like natural gas drilling.
And because Restore PA requires the state to pay off debt with severance tax money, the state would be tied to natural gas drilling for up to 20 years.
#askgovwolf States around us ban fracking, but you have it as a part of your “restore PA” plan. Why can’t we move toward clean renewable energy instead of living in the past?
— Fossil Free Pitt (@FossilFreePitt) June 20, 2019
#AskGovWolf Gov. you are way too soft on plastic … SUP is bad, whether it can be “recycled” or not. Recycling is not the answer. And “lightweight products” to meet the climate crisis is a euphemism for plastic. We can’t bet our future on this toxic industry.
— catherine gammon (@nonabiding) June 20, 2019
In an #AskGovWolf radio show hosted by Keystone Crossroads, Wolf said people need to be concerned about climate change.
“But in that energy efficient future, in that future that has a lower carbon footprint, we’re going to need to have lightweight products and those lightweight products are going to be made of the natural resource that happens to lie beneath Pennsylvania,” he said.
Later, Wolf’s press secretary, J.J. Abbott, said the governor was pointing to the fact that lightweight plastics improve gas mileage in vehicles and can reduce the energy required for shipping.
Wolf’s rhetoric around addressing climate change is at odds with his desire to expand Pennsylvania’s petrochemical industry. During his reelection campaign last year, Wolf linked the need for renewable energy to his support for the massive ethane cracker Shell is building outside Pittsburgh. Once it’s online, the plant will be among the largest air pollution sources in the state.What is Wolf’s argument for the severance tax?
Pennsylvania is the only major gas-producing state in the country without a severance tax.
Wolf argues that, because natural gas is distributed across state lines, Pennsylvania residents end up paying for the cost of severance taxes in other states.
And Wolf says there are two big reasons why a tax won’t drive drillers away. The natural gas is here, for one. The industry has also invested billions of dollars in new pipelines to move the gas to new customers– in the U.S. and abroad.
And the state is “smack dab in the middle of the richest market in the world for the products that come out of this,” Wolf said.
That gives the state an advantage over Texas, Louisiana and Alberta, Canada, he said.
Who supports Restore PA?
In the state House, the legislation was introduced with 99 co-sponsors. That’s nearly a majority of members supporting the measure in the 203-seat chamber.
Of those 99 lawmakers, 83 are Democrats and 16 are Republicans.
Half of those Republican co-sponsors represent part of the Philly suburbs: Delaware, Bucks, Montgomery and Chester counties.
In the 50-seat state Senate, the legislation was introduced with 25 co-sponsors: 21 Democrats and 4 Republicans.
Three of the four Republicans represent only or mostly the Philly suburbs. The fourth is Sen. Mario Scavello, who represents parts of Monroe and Northampton counties.
Wolf has also received endorsements from community leaders across the state — although, he acknowledged, relatively few north of Interstate 80.
(The Wolf administration created the below map of community endorsements.)
“Maybe I’m not explaining it as well as I should, but those areas above Route 80 are actually places that could use this the most, where broadband doesn’t exist,” Wolf said on WITF’s Smart Talk.
The lack of broadband hurts people’s access to business, schools and healthcare — and he said once autonomous vehicles become a reality, areas without broadband won’t have them.Why Pennsylvania has never enacted a severance tax
Since Pennsylvania’s natural gas boom began around 2008, there have been calls to implement a severance tax, but it’s never happened. Why? As StateImpact Pennsylvania has reported, a lot of it comes down to the power of the natural gas lobby.
Shortly after the gas boom started, in 2009, the state House (then controlled by Democrats) passed a severance tax. It was defeated by Republicans in the Senate.
Instead of a tax, Pennsylvania came up with a unique way of handling the fiscal impacts of drilling. In 2012, the legislature passed a special “impact fee.” Gas companies pay a fee for each well they drill. Most of the money goes back to the local governments where drilling is happening.
A severance tax would be paid on how much gas is produced, when drillers “sever” the resource from the earth. In other words, Pennsylvania taxes holes in the ground — not gas.
In 2017, the GOP-led state Senate also approved a modest severance tax. It did not advance in the Republican-controlled House.
While severance tax talk continued in Harrisburg, Pennsylvania’s natural production has skyrocketed. In 2017, the Commonwealth accounted for 19 percent of total U.S. natural gas production — more than any other state, except Texas.How much money has the impact fee raised?
According to the Pennsylvania Public Utility Commission, the impact fee brought in more than $1.4 billion from 2011 through 2017.
Earlier this year, the Pennsylvania Independent Fiscal Office estimated that the impact fee would generate $247 million for 2018.
What happens to the impact fee if Restore PA passes?
It would remain. Wolf says that impact fee is important for areas directly affected by drilling.
Wolf has estimated that his proposed severance tax would bring in about $300 million more a year, on top of the impact fee.What’s next?
In the state House, Democratic Leader Frank Dermody said that members were preparing a discharge resolution to move the Restore PA bill out of the Environmental Resources and Energy Committee if there is not quick enough action on it. It takes a majority vote in the House to pass a discharge resolution, sending it to the full House.
Under the current legislative calendar, Restore PA supporters wouldn’t be able to attempt a discharge resolution in the House until the fall, said House Democratic Caucus spokesman Bill Patton.
And there are also procedural moves that a committee chair can take, such as changing the bill significantly through an amendment, to stop a measure passing through a discharge resolution.
In the Senate, Majority Leader Jake Corman said the Senate doesn’t plan to take up the Restore PA bill this month, reported Capitolwire, an online subscription-based news service.
Wolf said he’s hopeful lawmakers will return to it in the fall.
“Often when they say we’re going to get to it in the fall, that’s just sort of pushing it off into never-never land,” Wolf said. “But I think this time, it is something that we’re all going to come back to in the fall.”
Hydrogen fluoride is used in the process of turning crude oil into gasoline at PES, but a release of the chemical could have had deadly consequences.