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Marcellus shale impact fees offer hope for municipalities

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By Michael Aubele
Friday, March 25, 2011

From covering legal costs to subsidizing firefighter training, local officials said there are several expenses that a fee on the natural gas industry could offset. To that end, they were heartened by Gov. Tom Corbett's statement on Wednesday that he's not opposed to letting communities or counties assess such a fee.

"We're the ones who experience the direct impact," Frazer Supervisor and Township Secretary Lori Ziencik said. "The money from any fee should go directly to the local governments bearing the brunt of the abuse on roads and the environment."

Ziencik suggested an impact fee could help communities negotiate the public safety costs created by companies drilling into the Marcellus shale. She said training firefighters to respond to an emergency at a Marcellus well can be costly.

Ziencik added that a fee could subsidize the cost of road repairs not covered by the road bonding required in most township ordinances. She said the bonding rate of $12,500 per mile established by the state fails to cover the full cost of repairing roads damaged by drilling-related truck traffic.

Frazer officials were able to negotiate an "excess maintenance agreement" with Range Resources to manage road repair costs that exceed the bonding rate, Ziencik said.

Range Resources drilled a Marcellus well along the bluff above the Pittsburgh Mills mall.

Despite his continued opposition to taxing companies drilling in the gas-rich Marcellus formation, Corbett said he's open to a discussion about generating money for local or county governments through an impact fee.

The statement offered hope to local and state leaders who said their communities are struggling to negotiate costs created by the booming industry.

State Rep. Jesse White, D-Cecil Township, said he's involved in drafting a state law to give communities the right to assess an impact fee.

"They will address an immediate need that's not being met," White said. "This is one burden that should not be passed on to taxpayers."

White said an impact fee could cover costs beyond public safety expenses. They could offset legal and administrative fees.

Upper Burrell Supervisor Chairman Ross Walker III said he favors being able to recoup those costs, in addition to paying for road repairs. He said it's possible the township could pay twice as much in legal fees this year by drafting an ordinance to regulate drilling. Walker said the township's annual legal bill is typically about $10,000.

"We have six proposed well beds on Alcoa property," he said. "I think that could be the start of something in Upper Burrell."

"I think he's passing the buck to save his own hide," Murrysville Council President Joan Kearns said of Corbett. "He said he would not pass any new taxes, so he's passing it on to the local governments to make us do it."

Kearns favors the concept because of the damage that trucks loaded with heavy equipment and wastewater could do to roads. Murrysville officials are creating an ordinance to prepare for drilling.

From an industry standpoint, Travis Windle, Marcellus Shale Coalition spokesman, said he expects Corbett's Marcellus Shale Advisory Commission to look closely in the coming months at taxing the industry or assessing an impact fee.

Noting that there hasn't been any proposed legislation creating a fee, Windle said: "We maintain the view that we need to look at these policies holistically and broadly. It's not just do we need a new tax or fee, but how do we best protect our environment and water resources while we help encourage an investment in Pennsylvania."

State Sen. Jim Ferlo, D-Lawrenceville, opposes an impact fee because it "would not address the myriad impacts" of the deep drilling industry. He favors a severance tax on natural gas extraction.

"Governor Corbett and Republicans in the Legislature are trying to do an end run around his pledge to not raise taxes," Ferlo said.

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