Baker points to HB 1684 snag in PA

This does not look good at all:

HB 1684 hits snag

The PA Democrats are on the march . . . . . against us landowners.  What they want is our money for their cities.  It's called "redistribution of wealth".

House Bill 1684, which is intended to guarantee a 12 1/2 percent minimum royalty payment to landowners, regardless of the amount of post-production costs that a gas drilling company incurs, has hit a snag, state Rep. Matt Baker said on Tuesday.

Speaking at a meeting on Tuesday of the Bradford County Council of Republican Women, Baker, R-Wellsboro, said that the leadership of the Pennsylvania House has not yet allowed the bill to come up for a vote on the floor of the House.

There has been a "pushback by a lot of people" to the bill since it was approved on March 17 by the House Environmental Resources and Energy Committee, said Baker, who is one of the prime sponsors of the bill.

The leadership of the House and others have concerns about the bill related to "legality issues and constitutionality issues" and other matters, he said.

"We hope to get a vote on it (on the House floor)," said Baker. "I really believe it will pass" in the House if it is brought up for a vote, he said.

As a result of deductions from royalty checks for post-production costs, many local landowners are receiving royalty payments of 5 percent or less, Bradford County Commissioner Daryl Miller has said.

The intent of House Bill 1684 is to guarantee that landowners will receive the 12 1/2 percent minimum royalty that was guaranteed to them in a 1979 state law, regardless of the amount of post-production costs incurred by a gas drilling company, Baker said.

"Some of the biggest supporters of natural gas are coming after it (House Bill 1684)," said Doug McLinko, Bradford County commissioner.

Baker said he and other legislators have been meeting with the leadership of the House to try to address their concerns about the bill.

Baker, who is facing a challenge from Democrat Jonathan Ruth of Covington in his bid for re-election this year, also expressed concern that the gas industry could face an increased tax burden if a Democrat is elected governor of Pennsylvania in November and if the Democrats take control of the Legislature at that time.

"Every Democrat running for governor has supported a very large, monumental severance tax" on gas drilling, Baker said.

A number of Democratic candidates for Pennsylvania governor are supporting a 5 percent or 10 percent severance tax, he added.

Under Act 13, if a severance tax is enacted in Pennsylvania, the impact fee is automatically repealed.

Thus, the enactment of a severance tax would mean "no more local impact fee money coming to counties, townships and boroughs," Baker said.

He said he would not be surprised to see, in the event that a Democrat is elected governor and the Democrats take control of the House and Senate, both a severance tax and an impact fee levied, which he said would be "devastating."

Pennsylvania already has "some of the highest business corporate taxes in the country," which the natural gas industry must pay, and those high business corporate taxes don't even include the existing impact fee on gas drilling, Baker said.

"Most of the gas drilling states do not have these high corporate taxes as we do in Pennsylvania," Baker said.

Pennsylvania currently has a low unemployment rate of 6 percent, Baker said, adding that the unemployment rate would not "even be close to that" were it not for the existence of the gas industry and related businesses.

Baker said that Ruth supports a severance tax as well as "more funding for various programs."

And Baker said that those funding increases cannot occur without taxes being raised.

In a telephone interview on Tuesday, Ruth said a gas severance tax has been successfully implemented in Texas and West Virginia.

Gas companies have not left Texas and West Virginia as a result of the tax, and they won't leave Pennsylvania either, because "that is where the gas is," said Ruth, a K-12 music teacher in the Southern Tioga School District.

Ruth said he supports a gas severance tax, because gas companies should be "paying their fair share." By imposing an impact fee, gas companies are paying less than their fair share, he said.

Ruth said he does support increased state funding for education, which he said was cut under the Corbett administration.

He said he would increase state funding for education without increasing state taxes on residents, and there are various ways to accomplish that goal, he said. For example, he said, some of the revenue from the severance tax should be used to increase state funding for education, he said. The state would also have more funding available if it reversed some of the corporate tax cuts that occurred under the Corbett administration, he said.

The severance tax should also be used to pay for road upgrades, he said.

Baker also said that the Pennsylvania Utility Commission and the Pennsylvania Department of Environmental Protection have just released figures showing that a record amount of impact fee revenue will be distributed to counties and municipalities this year.

He said that the increase in impact fee revenue is due to the increased amount of gas that is being commercially produced in the state.

James Loewenstein can be reached at (570) 265-1633; or email: jloewenstein@thedailyreview.com.

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Replies to This Discussion

Permalink Reply by wyalusing jim on April 26, 2014 at 3:08pm

exactly moldy.

if the retroactive aspect of the bill is not taken out, it is doomed.

but too many landowners still believe that government can save them from their mistakes.

shame.

wj

Permalink Reply by Jim Litwinowicz on April 27, 2014 at 3:22pm

These are some complex issues that need to be worked out before the bill is passed.  Better to get right on the first try instead of having to write another bill next year.  We need to work with all of our local reps to keep the pressure on to get it done.

Permalink Reply by Moldyoak on April 28, 2014 at 3:00am

It is the pressure that our representatives are facing, pressure from their local constituencies, which is what firmly places them between a rock and a hard place.  On one side, rock:  the US Constitution, which specifically prohibits alteration of extant contracts.  Unless the legislature can pull a rabbit out of a hat, I personally (disclosure, I'm not a legal professional) can not see any way to legislate a prohibition upon the 'net-back below 12.5% issue' when existing contracts specifically allow it.  On the other side, constituents with these leases:  what type of reaction will follow when someone who is 'keeping the pressure on...' is told, in no uncertain terms, that their legally-executed contract is binding and can not be altered?  What will follow will be the torches and pitchforks, and any such pol will be verbally crucified for an inability to accomplish something which is not legal to accomplish in the first place! 

Permalink Reply by Frank Walker on April 28, 2014 at 6:28am

Interesting defeatist attitude.  There was no such rending of garments by the other side (i.e., the gas companies) when they last year successfully sought to re-interpret equally "valid" leases in their favor (Reference:  Section 2.1 of PA Act 66 of 2013).

Now the shoe is on the other foot and supposed landowners are arguing against passage of law beneficial to US!!!  Because if we can get this law, as I asserted earlier, the burden of legal challenge shifts to the shoulders of the gas companies . . . right where it belongs.  If the gas companies decline to challenge the law in court, it stands!!!

Let's face reality:  I'm a landowner but this is the internet.  I've no way to prove to readers of this post that I'm a landowner.  I leave that for you to judge because doing so is my only option.

Similarly, several voices here saying there is no legal way to accomplish what landowners want and need claim nevertheless to be landowners.  But they argue often and strongly precisely as if they were gasco champions . . . or shills . . . or both.  I will leave it to others to judge the honesty . . or otherwise . . of such people.  As for me, I have my strong suspicions.  If it looks like a duck, waddles like a duck, and quacks like a duck, it's a darn duck!!!   

Permalink Reply by PHILIP ANGELO on April 28, 2014 at 7:01am

Frank, I totally agree I think O&G company are infiltrating this site. Rember US landowners VOTE!!!!!!!!!!!!! enough said!!!!!!

Permalink Reply by Moldyoak on April 28, 2014 at 8:30am

It certainly doesn't take much effort or character to sit at a computer and challenge someone's honesty Frank.  I am entitled to my OPINION - as are you - regardless of whether you agree with me or not.  You seem quite quick to judge and quite quick to play the 'gas company shill' card whenever you read something you apparently do not care for.  I guess you'll be the guy at the front of the crowd with the first stone.

Permalink Reply by Doug Duffield on April 28, 2014 at 11:38am

Must be more gas industry "shills" than landowners on gas forums.

Permalink Reply by Moldyoak on April 28, 2014 at 1:32pm

Looks that way.  

Permalink Reply by Frank Walker on April 28, 2014 at 10:10am

Jim I've already addressed this but will do so again for your benefit.  There are issues with this legislation . . . but they are not related to things others here would have you believe.  The real issues revolve around existing conventional wells, mostly in western PA.  Republican legislators from those regions have (legitimate and valid) concerns.  The Republican leadership is attempting to put those concerns to rest.  This is in no manner related to any supposed unconstitutionality or illegality of the legislation.  That's a matter for the courts, if the gas companies ever dare to challenge us there, in the process risking still more negative publicity and strengthening further the anti-drilling environmental crazies.

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