As a longtime supporter of the severance tax, I find myself in the unusual position of now opposing it.
Although it would provide much-needed revenue for this year’s commonwealth budget, it is clear that Senate Republicans will not allow even a modest severance tax without exacting provisions that would significantly compromise the state Department of Environmental Protection’s ability to regulate the natural gas industry.
Pennsylvania is the only major gas-producing state without a severance tax. It has been fiercely opposed by the drillers since it was first proposed by Gov. Edward Rendell in 2010.
Since then, drillers and their representatives have spent $46.6 million on lobbying and $14.5 million on strategic campaign contributions to legislative leaders and key committee chairs, according to the Inquirer. But despite the gas industry’s opposition, the commonwealth’s dire financial situation has sparked serious discussion about a severance tax to help fund the budget.
In July, the state Senate passed a tax code bill that contained a severance tax of less than 1 percent. But the bill also included three provisions that would make it much more difficult for the DEP to regulate the natural gas industry.
The first would provide that any unconventional oil and gas permit application the DEP does not process fast enough would be “deemed approved” regardless of whether it meets legal standards for approval. Arbitrarily forcing the DEP to issue permits because a certain number of days have passed would put the public’s health and the environment at risk.
The second provision would privatize the environmental permitting process, allowing gas drillers and other applicants to seek permit approval from third parties rather than the DEP. This would eliminate a core protective function of the DEP and introduce conflicts of interest that would weaken protections for public health and the environment.
The third provision would establish a politically appointed advisory committee to decide on air quality permits for unconventional gas well sites. This, in effect, would eliminate part of the methane-reduction strategy Gov. Wolf proposed last year. Reducing fugitive methane emissions is one of the most important things that Pennsylvania can do to address climate change.
The potential environmental damage of these three provisions is not worth the revenues even a robust severance tax would bring.
Unfortunately, the governor has indicated he would sign this bill.
Gubernatorial politics have factored heavily into the severance tax debate with potential candidates on both sides of the aisle calculating how its passage might affect their chances in 2018.
Although some provisions of the tax code bill have changed, the severance tax and these permitting provisions are still under consideration, and on Oct. 18, a severance tax bill was approved by the House Finance Committee. That same day, Senate Majority Leader Jake Corman (R, Centre) reiterated that there would be no severance tax without permitting provisions that would weaken DEP.
People who care about good public policy should not be lobbying for a severance tax now. Instead, they should stand against legislation that would endanger public health and the environment.
State Rep. Greg Vitali (D, Delaware and Montgomery counties) represents the 166th Legislative District. He can be reached at email@example.com.