Baker points to HB 1684 snag in PA
This does not look good at all:
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.
Views: 1734
Replies to This Discussion
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Permalink Reply by robert g. weaver on
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Do you think it will ever go through? I had my hopes but not now.
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Permalink Reply by Philip Thackray on
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While I am stanchly conservative, Republicans have a lot to do with holding this bill back. It was the Democrat vote not the Republican vote which got it out of committee. My own state representative - a Republican - is a against HB1684. The Gas and Oil companies have the money and the landowners are a small constituency. I'm afraid that fairness and idealism are remote concepts to both parties.
Phil
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Permalink Reply by Mark McGrail on
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Frank,
Having lived in urban areas all of my adult life and knowing politicians I agree wholeheartedly with your assessment.
These politicians from the urban areas look at the wealth being created in rural PA and all they see is tax dollars. Tax dollars they do not intend on sharing with those rural areas.
So landowners in the rural areas need to speak loud and often to their state Senators and state Reps. Those Senators and Reps should be representing your interests.
I have written before about people taking action and many replies have been that you don't have the power. Yes You Do! Write, Call, E-Mail, then start the process again and again. Then Vote and get your family and friends to vote. Vote for people who represent you and your interests.
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Permalink Reply by PHILIP ANGELO on
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Frank what have you heard?
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Permalink Reply by Mark McGrail on
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In the article Rep. Baker is quoted as saying that the House leadership is preventing a vote on the bill. Who are the House leadership ? That's who I would be contacting.
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Permalink Reply by wyalusing jim on
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the leadership is actually trying to save the bill by not putting it "back on the table".
they know that there is insufficient support in the house currently to pass it, and so bringing it up for a vote will mean certain death. they will have to start all over if it is voted down.
and you can bet that there is a lot of backroom dealing on this bill too. "you vote for mine and i'll vote for yours" is the way it gets done in Harrisburg.
eventually some version of this bill may reemerge with sufficient support to get passed.
but then it will need to get through the senate, and maybe go back to the house, and on and on before it gets to Corbett. anyone expecting this to end soon is just dreaming.
wj
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Permalink Reply by Philip Thackray on
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I do not think there will be strong support for this bill from Republicans or Democrats. To begin with the number of landowners who get or will get royalties is VERY small. The affected constituency in urban areas is essentially zero.
The Republicans who mainly support the drilling and the Gas and Oil companies will see this issue in favor of the Gas and Oil companies which means no bill.
The Democrats will see HB1684 as taking money from the Gas and Oil companies thereby increasing the negative impact of the severance tax they hope to get after the next election which means no bill.
In short, both parties want the money that the landowners are being screwed out of and I don’t think that will change.
I wrote to my representative in support of HB1684 and I sincerely hope it passes but….
Phil
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Permalink Reply by Frank Walker on
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Guys I appreciate all the responses. Sorry, but I know no more than what's in the article.
Taking into consideration the political climate in America today, we as landowners do not find ourselves in an enviable position. One political party is actively seeking to turn a majority of Americans against people like us, whom they term the "1%", even though we might not be that at all. We are, to the other side, "winners in life's lottery". It's a rallying point for them, a way to divide and (politically) conquer, a means to an end. Sure it's un-American. That bothers them less with each passing year. When you are a socialist at heart, people with traditional American values are an annoyance.
So HB 1684, which helps a class of Pennsylvanians currently out of favor state-wide and nationally, is a difficult political slough. In addition:
There are concerns with HB 1684 related to conventional wells. These issues surface primarily in WPA. But they can be sufficiently worrisome, even for some WPA Republicans, to where they force a "no" vote. Thus this thing is not breaking down strictly along party lines. It's difficult to guess, at this point, how it all will pan out.
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Permalink Reply by Frank Walker on
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I am posting again because I want to rebut an argument that is "out there". This relates to presumption and to legal burden. First, consider not all acts of the PA Legislature are "legal", which is to assert not all pass constitutional scrutiny. Matters of constitutionality are left to the courts. So should the PA legislature pass, and should Governor Corbett sign, legislation obviously unconstitutional? No, of course not. The point is though that constitutionality, or otherwise, can sometimes be in the eye of the beholder. Learned attorneys can disagree on such matters. What it oftentimes comes down to is burden.
Consider PA Act 66 of 2013, which hurt so many Pennsylvania landowners. What Act 66 actually did was to shift a massive legal burden onto the shoulders of (mostly WPA) landowners. Could a landowner not challenge Act 66 in court? Absolutely. Would there be a reasonable chance of success? Certainly. But the legal burden for any individual landowner of an Act 66 court challenge would be virtually unbearable. Even for a group of landowners acting in concert, challenging Act 66 would be a huge undertaking. Bottom line, AFAIK Act 66 stands today unchallenged in our PA courts, while landowners continue to suffer the disadvantage it imposes on them.
I see the same sort of thing with HB 1684, except in reverse. 1684 is surely constitutionally questionable. But if it becomes law, this time it would be the gas companies bearing the burden of a court challenge. The gas companies, quite obviously, are better equipped for this sort of legal wrangling than we are. But they also have to include in their calculus the negative publicity which would ensue; heck, there has been quite a lot of that already! They also would have to factor in that any court challenge to law flowing from 1684 would fuel opponents of drilling.
Bear in mind that if HB 1684 is signed into law, that law is presumed valid and will stand if not challenged in court. And since 1684 is of benefit to us, to landowners, it would not this time be us wanting to do the challenging. Arguments by internet wags that 1684 should not have our full support because it is obviously unconstitutional are specious and wrongheaded. I say, let's pass this thing and let the chips fall where they may. Let's put the legal burden on the shoulders of gas companies to do away with law based on 1684 . . . if they dare!!
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Permalink Reply by Philip Thackray on
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Here is a very good article written by a lawyer (but in plain language) about the PA Supreme court Kilmer v Elexco case which has put landowners in their present “deductions” bind. (From my alma mater – no less!).
http://digitalcommons.law.villanova.edu/cgi/viewcontent.cgi?article...
Phil
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Permalink Reply by Moldyoak on
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Before we go any further into the anti-politician rhetoric and accusations of 'big energy' buying votes etc. - all of which may have some merit, granted - please note Baker's comment that the snag seems to be focused on "...legality issues and consitutionality issues..."
This is entirely because lawmakers, who are certainly not ALL idiots, seem to recognize that there is no legal way to alter existing contracts and at the same time maintain constitutionality relative to the Constitution of the United States.
Which is worse: a politician who merely panders to the electorate and votes for a bill which he/she knows can not bear a constitutional test, or a politician who expresses empathy to a voter issue but voices a 'whoa, whoa, wait a minute, this can't work...?'
The issue of excessive royalty deductions is certainly within the sphere of legal investigation. Kilmer v. Elexco has seemingly addressed the issue which so many are now finding extremely burdensome, although many feel the judiciary left the legislature an 'out' or a path to change. However, I would urge anyone to re-read the decision in entirety, because nowhere within do I interpret the judiciary as stating that pre-existing contracts can be altered. I suspect that if HB 1684 were to restrict itself solely to contracts *going forward from the time of passage,* it may already have moved forward itself.
Legal investigation is not one and the same as legislation. The question as to whether royalty deductions are excessive is worthy of legal investigation, auditing, etc. However, the question as to whether a company can net back beyond the 12.5% threshold has seemingly already been legally settled by the aforementioned court hearing, and to attempt to force change upon contracts which specifically permit this process is going to essentially doom HB 1684 before it ever has a chance to proceed forward.
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