Archive for November, 2010

Severance Tax, Where Do We Go From Here?

Monday, November 8th, 2010

By Andy McAllister, Regional Coordinator

Editor’s Note:  Recently, WPCAMR had the opportunity to speak with Brenda Shambaugh, Policy Specialist with the PA Association of Conservation Districts (PACD) about the Marcellus Shale Severance Tax issue in Pennsylvania.  Shambaugh has been working with the Governor’s office, the Senate Republicans, environmental groups, and others to make the severance tax a reality.

WPCAMR:  Brenda, earlier this fall, the house passed Senate Bill 1155 which proposed a severance tax.  Can you tell us something about that?

Shambaugh:  Yes, Senate Bill 1155 did pass and it included a 39 cent per thousand cubic feet tax on marcellus shale gas drilling.  A portion of that funding would go to the General Fund, a portion to Environmental Stewardship Fund, and a portion went to a variety of other things including the Conservation District Fund which would provide dedicated funding for the conservation districts.  That passed the House and went over into the Senate but the Senate never addressed it.

WPCAMR:  We’ve heard that the Senate had expressed concerns about Senate Bill 1155.  One concern referenced the legislative process for this particular bill.  Can you enlighten us as to this particular stumbling block?

Shambaugh:  The (state) Constitution says that taxing bills need to be started in the House and even though the amendment originated in the House, it was put into a Senate bill.  That was the disagreement, whether or not  they could use a Senate bill as the vehicle.  That being said, if they had come to a compromise, I think there were at least two House tax bills in the Senate that may have been amended and sent back over to the House. 

WPCAMR:  So, in other words, there were other avenues to deal with any procedural concerns?

Shambaugh:  Correct. It wasn’t an insurmountable problem.  If they had come to a compromise, the House could have quickly put together a bill, passed it, and sent it to the Senate.

WPCAMR:  So where do we stand currently with the severance tax issue now that the Senate has declined to consider Senate Bill 1155?  What has happened in the last week or so?

Shambaugh:  I think there’s been a complete breakdown of negotiations between the parties involved within the General Assembly and the Governor’s office.  As a result of this and the fact that the Senate has said it will not return to Harrisburg after the election, unfortunately, I think that the issue is dead for this legislative session.  This legislative session technically does not end  until November 30th but because the Senate said they will not return, this session has virtually ended.

WPCAMR:  In spite of the fact that both the House and Senate had promised, as part of their budget negotiations this summer, that they would pass some kind of severance tax legislation by October 1st?

Shambaugh:  That is absolutely correct.  They did promise to have a piece of legislation regarding severance tax go through the General Assembly however, they could not agree on what that legislation should say or what should be included in that legislation-whether it should be just a severance tax or some of the other issues going along with the Marcellus Shale drilling.  The fact it was a verbal agreement and not any kind of statute meant the General Assembly didn’t, by law, have to pass severance tax legislation as, for example, they have to pass a budget.  So I don’t believe they were legally mandated to come up with a severance tax even though you would think that they would have the obligation because of the public statements that were made.

WPCAMR:  What does being without a severance tax mean now for our environmental community and our state as a whole?

Shambaugh:  It means that as the industry continues to drill, Pennsylvanians are not receiving the benefits of that drilling activity and particularly in those areas of the state where the drilling takes place.  There are a lot of infrastructure issues, a lot of local government issues, and a lot of environmental issues that cannot be addressed because nothing is there to address them.

WPCAMR:  Do you think the severance tax issue will resurface when the next governor gets inaugurated in January?

Shambaugh:  I can tell you that PACD and probably a number of other groups, both local government groups and environmental groups are not going to just let the issue die.  We will continue to push and continue to advocate for a reasonable severance tax in Pennsylvania.  However, there are too many unknowns to really gauge whether or not it could happen next session.  The first unknown is obviously, who’s going to be the next governor, the second unknown is whether the Republicans or Democrats are going to have the majority in the House.  The only thing I can predict is that PACD is not going to let the issue drop.

WPCAMR:  So what happens to Senate Bill 1155 at this time?  Does it reappear next session?

Shambaugh:  At the official end of the session, all bills that weren’t passed, die.  As for the Severance Tax Bill, the process will have to start all over again.  My suspicion is that legislators who were supportive of a severance tax will reintroduce legislation which will include a severance tax.

WPCAMR:  That’s a hope for the future but what can our environmental community do right now?

Shambaugh:  I think the best thing that we can do is to keep pressure on the General Assembly to again address the issue.  The more public pressure, the more media coverage, the more letters to the editor will keep the pressure on legislators to readdress the issue of a severance tax.

WPCAMR:  So continuing to communicate with our legislators on this issue is still important?

Shambaugh:  Absolutely!  They need to know that folks are not happy about the fact that they didn’t pass this legislation.  I understand that the rank-and-file legislators were not a part of the negotiation process but the rank-and-file folks can pressure their leadership and say, “Look, I need this to be done”.

WPCAMR:  Has PACD been getting a lot of support with its efforts?

Shambaugh:  Tremendous support. The districts have worked with their legislators, they’ve sent letters to the editor, they’ve done op-ed pieces, etc.  The districts have absolutely been behind this one hundred percent.  Also, the fact that there’s been a lot of press coverage shows the importance of the issue and folks are definitely interested in the issue.  Particularly in the northern tier where they’re living and breathing marcellus shale right now.

WPCAMR:  Any final comments for our readers?

Shambaugh:  Just that PACD is hopeful that WPCAMR will continue to support vigorously, a severance tax for next legislative session.

We encourage you to write or call your legislator as soon as possible and urge them of the importance of the Marcellus Shale Severance Tax .  Specifically, a severance tax that supports Environmental Stewardship and County Conservation Districts.

To find contact information for your state representative and senator, go to: and enter your zipcode.