By a 31-19 vote, the Senate approved controversial legislation that taxes and regulates the gas drilling industry.
The conference committee report (approved 4-2 on a party line basis) on House Bill 1950 establishes a drilling “impact fee” on a sliding scale over 15 years for each well drilled. Under the revenue distribution formula, 60 percent goes to the local county and 40 percent to the state. The measure largely supersedes and preempts local regulation of oil and gas drilling in Pennsylvania.
Under the measure, each county in drilling regions has the authority to decide whether to impose the impact fee. However, if county commissioners decide against the fee, they could be overruled if half of the municipalities representing half of the county’s population approve their own resolutions in favor of a fee. Proceeds are divided between local governments and numerous state-based environmental, infrastructure and economic-development programs.
If counties adopt the fee, it was estimated that the fee could generate about $180 million in 2012, climbing to $264 million by 2014.
Other components of the law:
- prohibit municipalities from regulating gas drilling; but allow local governments to enact zoning restrictions for things like truck traffic, noise, and other industrial effects from drilling. Drillers can appeal a local zoning law to the state Public Utility Commission;
- require that property owners within 3,000 feet be notified of new permits (used to be 1,000 feet); prohibit drilling within 500 feet of existing buildings or water wells (used to be 200 feet); and ban drilling within 300 feet of streams, springs, bodies of water or wetlands greater than one acre;
- increase “blanket bonds” from $25,000 up to $600,000;
- require drillers to publicly disclose all chemicals used in the fracking process; and
- create a Natural Gas Energy Development Fund to convert truck fleets to compressed natural gas, liquefied natural gas, or bi-fuel vehicles. At least half of these funds must be used for grants to local transportation organizations, including mass transit agencies.
Bill proponents said the measure adequately taxes and regulates the lucrative gas drilling agency, while creating thousands of new jobs.
Opponents argued that imposing an impact fee instead of the traditional volume-based royalty structure used by other states will cost Pennsylvania an estimated $24 billion over the next 20 years. They also argued that the law tramples local zoning rights and doesn’t fairly distribute shale proceeds to all areas of the state.
Prior to this amended conference committee version of the bill, the Senate gutted and amended House Bill 1950 with the contents of Senate Bill 1100 in November of 2011.
The governor enacted the measure as Act 13 of 2012.
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By a vote of 34-16, the Senate passed legislation intended to clarify the law on Business Privilege Taxes (BPT) in the wake of a 2007 Pa. Supreme Court decision.
In V.L. Rendina Inc., v. Harrisburg and the Harrisburg School District, the court reversed a prior opinion that a municipality cannot levy the BPT on a business that did not have a “permanent” base of operations within its borders.
Senate Bill 405 intended to clarify the ambiguity that resulted over a municipality’s ability to tax any and all taxpayers conducting any business within its borders despite the court’s prior distinction between a business “privilege” tax and a business “transaction” tax.
The result, however, could mean significant revenue losses for some municipalities, including cash-strapped Harrisburg, which could lose as much as $2 million per year.
A Democratic amendment would have allowed most taxing jurisdictions that currently levy a BPT/Mercantile Tax the option of replacing it with an assessment on total payroll. The replacement tax would have been required to be revenue neutral. The amendment was defeated 31-19.
The bill now goes to the House.
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By a 48-1 vote, the Senate passed Senate Bill 117. This bill would allow any person who is authorized to sell alcoholic beverages to confiscate an identification card if they have a reasonable suspicion that the card was not legally issued to the individual.
Under this bill, the seller would have to verify the age of the purchaser by placing the ID card through an electronic scanner. The confiscated ID card would then be submitted to law enforcement within 48 hours to determine its validity.
The bill is now in the House Judiciary committee.
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By a vote of 49-1, the Senate approved legislation that will extend tax breaks available in Keystone Opportunity Zones (KOZs) and Keystone Opportunity Expansion Zones and allow for the designation of up to 15 additional KOZs.
Originally created in 1998, many KOZ tax breaks were set to expire. Senate Bill 1237 extends those breaks and provides new KOZs on properties adjacent to already existing zones. The bill extends the tax provisions on KOZs seven to 10 years from the date of occupancy or from the expiration date of the zone.
The bill was signed into law as Act 16 of 2012.
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The Senate unanimously approved legislation that would allow PennDOT to issue annual permits for the transport of cryogenic liquid by vehicle on the state highway system.
Senate Bill 1147 would permit movement of cryogenic liquid from a manufacturing or processing facility to another manufacturing or processing system at a gross weight not to exceed 102,000 pounds. The permit would be for state roads and would not include interstates.
The bill would also allow for the hauling of eggs in vehicles that do not exceed 95,000 pounds and the weight on a non-steering axle may not exceed 21,000 pounds. The fee for hauling eggs would be $400 and no permit would be issued for this type of movement on an interstate highway.
The bill is now in the House Transportation Committee.
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