Pennsylvania Doesn’t Need a Severance Tax; It Needs a Ban on Fracking

The severance tax on shale gas extraction is on the table in Pennsylvania … again. Only this time, it has a chance of passing. The state Senate has already voted for a budget that includes a small severance tax in exchange for the gutting of the DEP’s authority over shale gas development. (DEP, it would be a lot easier to defend you if you’d actually work in the best interest of the public and the environment once in a while. See Mariner East 2. See Auditor General’s report. See flawed air quality study. See fracking waste landfill records. See unexplained drop of $8.9 million fine. See water contamination records. See the Woodlands. See the Pipeline Infrastructure Task Force.)

The House has yet to vote on the tax. They’ve generally been more resistant to a severance tax than the Senate has been, so it’s probably just to make a point that an alternative has been offered as part of a “People’s Budget”, SB 566, a severance tax with “no strings attached.”

Pennsylvania doesn’t need a severance tax, with or without strings. It needs a ban on fracking. And imposing a severance tax is the best way to ensure we’ll never get one. For those operating in the bubble of climate denial that has ensconced the state capital, that isn’t at all troubling. For everyone else, it is terrifying.

Of course, there are plenty of reasons besides climate change to call for a ban on fracking in Pennsylvania. Just look at the areas of the state where fracking has ravaged communities to get all the impetus for a ban you could possibly need. That’s what New York and Maryland did. Visits by elected officials from those states, in addition to reviews of the science that includes LOTS of data from Pennsylvania, informed their decisions to ban fracking. Maryland did it with the public support of their Republican governor and bipartisan support in the legislature. Fracking bans elsewhere around the globe have followed visits by elected officials to Pennsylvania, as well. No sitting governor of Pennsylvania since fracking began has visited an impacted community.

Consider the fact that Governor Wolf has done everything within his power to expand the market for shale gas since taking office. I provided the short list in a piece on I wrote recently after Wolf’s disingenuous appeal to Trump to keep the U.S. in the Paris climate agreement. Incidentally, Wolf has yet to join the United States Climate Alliance that formed immediately after Trump made good on his plan to pull out of the agreement. How could he possibly join? Since he was sworn in, his Department of Environmental Protection has issued gas drilling permits at the rate of one every hour and fifteen minutes during business hours. And that’s without a severance tax. Imagine how much harder he’d work to create a need for the gas if he finally got the tax Dems have been dreaming of all these years.

But the tax itself makes no sense in a state where the industry has been given every imaginable tax break thus far. Here’s an excerpt from my original case made against the severance tax based on a report from the Pennsylvania Budget and Policy Center. “The drillers are already dodging most taxes imposed on them. They take advantage of the Delaware Loophole that allows them to shift profits out-of-state. When they do file in state, they structure themselves as LLCs and LPs so they can pay at the personal tax rate of 3% instead of the corporate tax rate of 9.9%. Oil and gas reserves are not subject to property taxes, as are other mineral deposits. Drillers are exempt from local business privilege taxes. State and local hotel taxes are waived on all those rooms rented long-term by the imported workers from Texas, Oklahoma, and elsewhere. Many drillers are exempt from local earned income taxes. A host of federal tax incentives significantly reduce the federal income taxes, and in turn, the state income taxes the companies pay regardless of how they file. Range Resources, the second largest driller in the state, had a federal tax rate from 2005 – 2008 of 0.4%. Why aren’t our elected officials working to enforce existing tax laws rather than create new ones?”

I continued, “What makes anyone think that the industry that is so good at dodging taxes isn’t going to dodge the severance tax?”

At the end of a meeting I helped organize with Governor Wolf, members of his cabinet at the time, impacted Pennsylvanians, and scientists, I told Wolf that he’s wanted to ignore one side of the balance sheet on fracking, the one that adds up what fracking is costing us. I wasn’t just talking about the incalculable cost of lives lost, properties destroyed, and water contaminated beyond reuse.

I was talking about the costs that are difficult, but possible to calculate. I was talking about the legacy costs of maintaining all of the wells as they are decommissioned. They will join the hundreds of thousands of wells, many dating back more than a century that must be maintained every 25 years to prevent even more climate-killing methane from leaking into the atmosphere. A Carnegie-Mellon study a few years ago put the price at capping one Marcellus well at $100,000. There are currently about 10,000 in the ground, thousands more already permitted, and nearly 100,000 more guaranteed to come if we start taxing drilling with any success. By the way, since 2013, the state has plugged 93 of the old pre-Marcellus wells or 23.25 per year. At that rate, using a conservative estimate of 500,000 old wells, it will take the state 21,505 years to cap all of them once.

I was talking about the costly public health crisis the state has chosen to ignore. In 2014, retired Department of Health whistleblowers recalled a buzzwords list that had been given to staffers with verbal instructions to disengage with anyone using the words and phrases on the list in filing health complaints. The words included fracking, Marcellus, skin rash, hair falling out, water contamination. Wolf promised during his campaign to establish a health registry. It was a too-little-too-late proposal when the priority was not to count sick people, but to help sick people. Those people are still awaiting help. The state’s active avoidance of dealing with health impacts for more than a decade will make it tough to calculate those costs.

I was talking about the costs of the climate impacts here in Pennsylvania and beyond. The atmosphere doesn’t care where the emissions are coming from. When we finally fall from the climate precipice we’re now clinging to, it will be because states like Pennsylvania and elected officials like Governor Wolf and every legislator who has failed to ban fracking pushed us.

Still think a severance tax is the answer?

 

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