American Oil and Gas Reporter - March 2019 - 95

ConventionSection: Pennsylvania Independent Oil & Gas Association

Pennsylvania's Industry
Fights Severance Tax
By Dan Holder
WEXFORD, PA.-Pennsylvania's governor may be looking to impose severance
taxes on the commonwealth's natural gas
industry yet again, but Republican legislators are opposing any such measures,
note leaders of the Pennsylvania Independent Oil & Gas Association.
Governor Tom Wolf still seeks to
levy a severance tax on the commonwealth's natural gas production, but he
has modified his proposal. Instead of
taxing each Mcf of production, his office
proposes, Pennsylvania would borrow
$4.5 billion to fund a four-year program
of infrastructure improvements. Revenues
from severance taxes, which would vary
according to commodity prices and the
amount of gas extracted, would pay back
the loan.
PIOGA President Dan Weaver points
out that when the governor unveiled his
latest proposal in early February, he asserted the budget contained no new taxes.
"That is correct. The severance tax proposal is not in the budget but in the addendum," he says. "It was disingenuous.
So, PIOGA will have to battle in a climate
that already is challenging."
PIOGA Chairman Gary Slagel says
while Governor Wolf continues his fouryear quest to impose severance taxes on
gas producers, House Speaker Michael
Turzai, R-McCandless, "has been very
adamant that this industry already makes
significant contributions to the commonwealth and he will not put additional
burdens on it.
"We play this game because the governor keeps saying we are the only state
without a severance tax, even though we
are the only state to have an impact fee.
We made a mistake back in 2011 by not
calling it an impact tax, because people
see it as a fee and don't equate it to anything akin to what other states oblige
their industries to pay," describes Slagel,
the government affairs specialist at Steptoe
& Johnson in Canonsburg, Pa.
Weaver says he detects no indication
that a severance tax proposal has a stronger
chance at passing than at any time before,

PIOGA Winter Meeting
Pittsburgh
Wednesday, April 10
8 a.m. Registration and Exhibition Open,
Rives Casino
9 a.m. Morning Session
Conference Welcome, Gary Slagel, PIOGA Board Chairman
Appalachian Basin Energy Forecasting
and Economic Outlook, Mason Ender,
BTU Analytics
"From Paris to Pennsylvania: Cap and
Trade and Climate Change," Kevin
Garber and Jean Mosites, Babst Calland
"Can Customizing Production Technologies
Stop Oil Production Declines?" Martin
Shumway, Locus Bio Energy Solutions
PA Regulatory Overview, Scott Perry,
Pennsylvania Department of Environmental Protection
Noon-1:30 p.m. Keynote Luncheon
"The Moral Case for Fossil Fuels," Don
Watkins, Center for Industrial Progress
1:30 p.m. Afternoon Session
"Cybersecurity, Energy Security & Emergency Response," Karen Evans, Department of Energy/CESER (Invited)
"Cracks in the Corporate Shield: Individual Liability for Corporate Violations," Jon Beckman and Brian Pulito,
Steptoe & Johnson
"Reclaiming Your Stranded Assets with
Virtual CNG Pipelines," Gregory Morse,
NG Advantage
Cove Point Terminal Update and LNG
Shipments, Patrick Brennan, ST Cove
Point, Marine Terminal Department
"The Power of PIOGA," Dan Weaver,
PIOGA
5-7 p.m. Cocktail Reception, Drum Bar

but the threat always is there, he acknowledges, and it could intensify if the
commonwealth's finances take a turn for
the worse.
Many Democratic legislators will support the governor's severance tax push,
Weaver predicts, suggesting that the issue
has become personal for Wolf. "This is
the one last box he has not been able to
check off since he was first elected four
years ago. I do not think the Democratic

legislators hear any drumbeat behind the
proposal, but to stay in his favor they will
support it as well, and hopefully that would
allow them to add some of their priorities
to any severance legislation," he says.
Weaver goes on to say that policymakers embrace of a bond plan strikes
him as crazy "Pennsylvania already is in
a situation where state leaders say they
don't have enough revenue sources," he
notes. "We keep opening up other opportunities through gambling and such
to try to generate more revenue, but now
we are going to go and borrow against
revenue when we don't know how much
revenue will be generated. That just tells
me if the severance tax ever was passed
and there was a shortfall, the tax percentage
must go up because the state will have to
cover that shortfall."
Eminent Domain
Pennsylvania's legislators are considering increasing pipelines' eminent domain
authority, Slagel says, with Senators Tom
Killion, R-Chester, and Andy Dinniman,
D-Chester, cosponsoring a number of bills
covering pipelines. The Mariner East
pipeline runs through Chester County, Pa.
Killion's office says the legislative
package seeks to reform the commonwealth's pipeline regulatory process to
improve safety in neighborhoods and
schools. Among the provisions are imposing a pipeline impact fee based on
the acreage of linear feet plus right-ofway width of a pipeline using the county's
average land value, with the collected
funds to be distributed to affected counties
and municipalities. The proposed legislative package also includes:
· Authorizing counties to impose fees
on all covered pipelines in their jurisdictions;
· Requiring pipeline companies to
submit detailed information to the Public
Utility Commission before constructing
a pipeline, and securing approval from
the Pennsylvania Department of Environmental Protection, local governing
board of a county, and local emergency
management organization coordinators;
and
MARCH 2019 95
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