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Corbett: No forced pooling By MARC LEVY Associated Press
PITTSBURGH — Gov. Tom Corbett told a crowd from the region’s booming natural gas industry Tuesday that Pennsylvania needs its help to climb out of the recession, but he also warned that he would aggressively enforce environmental laws and that he opposes a controversial change in law sought by drilling companies. "Forced pooling" is tantamount to private eminent domain, and he doesn’t agree with it, Corbett told the seminar crowd in suburban Pittsburgh, which is a fast becoming a hub for multinational energy companies exploring the Marcellus and Utica shales beneath Pennsylvania, Ohio and West Virginia. "I’m sure there’s many here, many here that would like to see" forced pooling for Marcellus Shale gas, he said. And then he told what he called "maybe a dirty little secret" about companies that say they would be willing to pay a severance tax that is the subject of much debate in the state Legislature. "They never add the caveat that I know that many of the companies that have gone to Harrisburg have said, ’Yeah, we’ll take the tax if we get certain things in regulation, including the forced pooling,’" Corbett said. Forced pooling is on the books in some other states and can be used to force holdout landowners to lease their below-ground gas rights under certain conditions. The issue, at the top of the indus-
try’s wish list since at least last year, has gained little traction in the Legislature. Companies say it would help Corbett limit the number of roads and wells built to extract gas. Corbett also opposes a severance tax on gas extracted from the Marcellus Shale, the nation’s largest-known gas reservoir. On Tuesday, he reiterated his stance against it, and tried to underscore the urgency of competing for the industry’s money and equipment. The Marcellus Shale beneath Pennsylvania is one of six natural gas deposits vying to offer the best return on investment for energy companies, he said. "I need, we need, Pennsylvania needs the jobs today to get out of this recession," he said. Pennsylvania is the nation’s largest natural-gas producing state that does not tax the activity. Corbett, who said the media would call Tuesday’s crowd of several hundred a "friendly audience," accepted nearly $1 million in donations to his gubernatorial campaign from people in the natural gas industry. However, he closed his 35-minute speech by promising to vigorously enforce environmental laws and saying he will use his power to grant drilling permits to puni-
sh companies, if necessary. "I know how to get the attention of your CEOs, whether they be here in Pennsylvania or in Oklahoma or in Texas or in Louisiana, and that’s through the permit," Corbett said. He spoke a week after he asked natural gas drillers to stop one of their most troubling environmental practices: taking polluted wastewater from gas wells to riverside treatment plants that aren’t equipped to remove all the contaminants. The audience heard numerous warnings about losing the public relations battle over the industry’s environmental record and the possibility of stronger regulations, both on the federal level and in states from Texas to West Virginia. Drawing gas from shale deep underground is being touted by the industry as a major new source of cheap, homegrown energy, thanks to the recent combination high-volume hydraulic fracturing and the new technique of horizontal drilling. Nearly 3,000 wells have been drilled in Pennsylvania’s Marcellus Shale. However, hydraulic fracturing, or fracking, has sparked concern from some environmental groups and public officials, particularly as people in drilling communities in Texas, Pennsylvania and elsewhere come forward with tales of contaminated air and well water. It also has drawn scrutiny from the U.S. Environmental Protection Agency.
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than they did in Pennsylvania. Drillers paid $44 million in Pennsylvania sales and business taxes, while, in Texas, they paid $8.8 billion in drilling, property, sales and corporate taxes, according to the report. “Texas has about 34 times as much oil and gas drilling as Pennsylvania, but took in 200 times as much in taxes from the industry,” said Sharon Ward, center director. “Clearly, drillers are getting big tax breaks in Pennsylvania that they don’t enjoy anywhere else.” The report seems to debunk a statement by former Gov. Tom Ridge, now a board member of the natural gas industry’s Marcellus Shale Coalition, who said the industry “helped the state generate more than $1 billion in revenue to state and local governments.” But Elizabeth Brassell, spokeswoman for the state Department of Revenue, said the report is “a narrow look at old tax data” and used “less than ideal research methodology.”
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perts, Marcellus production generated nearly $785 million in tax revenues through 2010 in Pennsylvania while helping to create more than 88,000 new jobs. “Further, a more recent Penn State analysis clearly demonstrates that state sales tax revenues, realty transfer tax collections, as well as overall tax income continue to soar in Marcellus producing counties,” Windle said, adding that tax income increased 325.3 percent in counties with 10 or more wells. Steve Miskin, press secretary for House Majority Leader Mike Turzai, R-Allegheny, said the industry is creating “good-paying” jobs, the companies and employees are paying taxes and the companies are fixing roads and making other improvements. State Sen. John Yudichak, DPlymouth Township, on the other hand, supports a severance tax. In March, he introduced Senate Bill 905, which would evenly distribute severance tax revenue between the Commonwealth Financing Authority for water supply, wastewater treatment, stormwater and flood control projects; the Environmental Stewardship Fund; and local governments directly affected by natural gas drilling.
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Brassell said the report was based on data the department provided a year ago, and the department has since identified better research methodologies. Brassell said some of the information in the report is either “blatantly wrong or misrepresented.” For example, the assertion that only $13 million was paid by the industry in personal income taxes must be based on “faulty information,” she said, “because we can’t get that figure anywhere.” In response to the claim that many companies structure as LLCs to avoid paying corporate taxes, Brassell said the department is finding “a number of cases” in which LLCs are owned by corporations rather than individuals and, in those cases, the corporations are paying “substantial” income taxes. “In looking at it, state taxes paid by the industry so far in 2011 are already nearly exceeding what the industry has paid in all of 2010 and we’re totaling collections in the hundreds of millions annually rather than the tens of millions,” Brassell said. Travis Windle, spokesman for the Marcellus Shale Coalition, said that according to independent Penn State University ex-
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