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Corbett Signs Three Key Energy-Sector Bills

Tue, 02/14/2012 - 4:49am
MARC LEVY, Associated Press

HARRISBURG, Pa. (AP) — Gov. Tom Corbett on Monday signed three key bills for Pennsylvania's energy sector, including a wide-ranging bill that updates regulations surrounding the state's booming natural gas industry and removes Pennsylvania's distinction as the nation's largest gas-producing state that does not impose a levy on the activity.

No public event was held for the signings, which the governor's office announced Monday evening.

Among the other bills that Corbett signed privately was one that would allow public utilities to charge ratepayers up front for improvements to power lines and water, sewer and natural gas pipelines, and another that could deliver long-term tax breaks to a buyer of three Philadelphia-area oil refineries that are shutting down and a massive petrochemical refinery that may be built in southwestern Pennsylvania.

The latter bill is a centerpiece of Pennsylvania's competitive pitch in a race against Ohio and West Virginia to persuade a subsidiary of Netherlands-based oil and gas giant Royal Dutch Shell PLC to build a petrochemical refinery in the Pittsburgh area, potentially meaning thousands of new jobs and millions of tax dollars for the state.

Under the natural-gas drilling bill passed last week by the state Legislature, Marcellus Shale exploration companies will be required to pay an "impact fee" to help fund various state and local government programs, although the comparable tax rate they would pay would be well below what many other major natural-gas producing states require.

The decision of whether to impose the fee will be left up to local governments. County commissioners or county council members in about 35 counties now have 60 days to decide whether to impose the 15-year impact fee on their local Marcellus Shale wells. If a county board votes against imposing the fee, a critical mass of its municipalities would have another 60 days to impose it countywide.

If they do, they'll share 60 percent of the money with their municipalities after a cut goes to state agencies and a program to help buy natural gas-powered fleet vehicles. That could mean more than $10 million flowing later this year to each of Pennsylvania's most heavily drilled counties, including Bradford, Tioga, Washington, Lycoming, Susquehanna and Greene.

Dollars also would flow to improve bridges and water and sewer plants, build affordable housing and potentially subsidize the development of the plant Shell may build in Pennsylvania or the reuse of the Sunoco and ConocoPhillips oil refineries.

Lawmakers approved the fee more than three years after the exploration industry, armed with new technology, descended on Pennsylvania and began pouring billions of dollars into tapping the Marcellus Shale natural gas formation, the nation's largest-known natural gas reservoir.

The gas-drilling bill also would toughen safety standards and limit the ability of local officials to keep drilling out of their towns.

Corbett and the industry had sought provisions to prevent the ability of municipalities to regulate any drilling activity, but such a provision couldn't pass either legislative chamber. Instead, the bill would require municipalities to allow drilling in all zones, including residential, and require them to follow state spacing requirements. But it also would allow them to apply zoning standards on things like lighting, noise and structures that are used for other industrial activities.

During debate on the bill last week, Rep. Scott Conklin, D-Centre, called the provisions tantamount to "corporate eminent domain."

Supporters of the bill to speed up public utility work say it would allow utilities to save time and money on borrowing funds to finance projects.

The legislation limits the up-front amount utilities could bill ratepayers, and state regulators would review future plans and follow up to ensure companies comply with them.

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