PRIOR PRINTER'S NO. 1402
PRINTER'S NO. 1791
THE GENERAL ASSEMBLY OF PENNSYLVANIA
HOUSE RESOLUTION
No.
131
Session of
2023
INTRODUCED BY STEELE, HILL-EVANS, MADDEN, KHAN, WARREN, SANCHEZ,
PROBST, FRIEL, MALAGARI, BOROWSKI, PIELLI, SCOTT, VITALI,
KENYATTA, HOHENSTEIN, SHUSTERMAN, TAKAC, D. WILLIAMS,
SALISBURY, DONAHUE, SAPPEY, CEPEDA-FREYTIZ, KRAJEWSKI,
CIRESI, MAYES, GREEN AND WEBSTER, MAY 31, 2023
AS AMENDED, HOUSE OF REPRESENTATIVES, JUNE 29, 2023
A RESOLUTION
Directing the Legislative Budget and Finance Committee to
conduct a study to determine the amount of revenue that
Pennsylvania may have collected since the enactment of Act 13
of 2012 if the Commonwealth implemented a severance tax.
DIRECTING THE LEGISLATIVE BUDGET AND FINANCE COMMITTEE TO
CONDUCT A STUDY TO COMPARE IMPACT FEES AND SEVERANCE TAXES IN
THE LARGEST NATURAL GAS PRODUCING STATES AND EXAMINE THE
COMPETITIVE BUSINESS CLIMATE FOR THE INDUSTRY IN THOSE
STATES.
WHEREAS, A large portion of the Marcellus Shale Basin, a
stretch of sedimentary rock several thousand feet underground,
over 400 million years old and containing a huge source of
natural gas and oil, sits within Pennsylvania's borders; and
WHEREAS, The Marcellus Shale is stretched amongst several
states, including New York, the western region of Maryland and
West Virginia, as well as the far eastern regions of Ohio,
Kentucky and Tennessee; and
WHEREAS, Since the early 1800s, Pennsylvania has been home to
nearly 40,000 active natural gas wells while approximately 4,000
new wells are drilled each year; and
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WHEREAS, On February 14, 2012, the Pennsylvania Legislature
passed Act 13 of 2012 to establish impact fees for oil and gas
drilling in the State; and
WHEREAS, Impact fees are collected from oil and gas drilling
companies based on the number of new wells drilled, whereas
severance taxes are based on the amount of natural gas extracted
from wells; and
WHEREAS, IMPACT FEES ARE COLLECTED FROM OIL AND GAS DRILLING
COMPANIES BASED ON THE TOTAL NUMBER OF NEW WELLS A PRODUCER
OWNS, THE AGE OF THE WELL AND THE AVERAGE PRICE OF NATURAL GAS
FOR THE PRECEDING YEAR, AS CALCULATED BY THE PENNSYLVANIA PUBLIC
UTILITY COMMISSION UTILIZING THE SETTLED NATURAL GAS PRICE OF
THE NEW YORK MERCANTILE EXCHANGE (NYMEX), WHEREAS SEVERANCE
TAXES ARE BASED ON THE PRICE OF NATURAL GAS AND THE AMOUNT OF
NATURAL GAS PRODUCED FROM WELLS; AND
WHEREAS, Second only to Texas in production, Pennsylvania is
the largest natural-gas-producing State in the United States
that does not impose a severance tax on new or current
unconventional gas wells IMPOSES AN IMPACT FEE ON PRODUCERS; and
WHEREAS, In 2022, Pennsylvania accounted for 19% of marketed
natural gas production in the United States; and
WHEREAS, Pennsylvania's marketed natural gas production was
at an annual high of 20.9 billion cubic feet per day (Bcf/d) in
2021 and averaged 20.5 Bcf/d in 2022; and
WHEREAS, Although the number of horizontal wells increased
from 4,022 in 2011 to 11,164 in 2022, and the amount of gas
produced increased from 1,066 billion cubic feet in 2011 to an
estimated 7,600 in 2022, the revenue income to the State did not
increase; and REMAINED RELATIVELY STABLE, FLUCTUATING BETWEEN
$146 MILLION AND $279 MILLION; THEREFORE BE IT
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WHEREAS, Impact fee revenue has hovered between $146 million
and $274 million per year and has not steadily increased in the
same way gas production has increased since 2011; therefore be
it
RESOLVED, That the House of Representatives direct the
Legislative Budget and Finance Committee to conduct a study to
determine the amount of revenue Pennsylvania may have collected
since the enactment of Act 13 of 2012 if the Commonwealth
implemented a severance tax and submit a report with its
findings to the General Assembly within one year of the adoption
of this resolution; and be it further
RESOLVED, That, at a minimum, the report include all of the
following information:
(1) The severance tax rates imposed and the years
imposed in other states.
(2) The amount of natural gas and derivatives of natural
gas extracted from Pennsylvania since the enactment of Act 13
of 2012.
(3) The amount of revenue generated by the impact fee,
per year, and the total, since the enactment of Act 13 of
2012.
(4) An estimate, with the calculation method, of the
amount of revenue Pennsylvania may have generated if the
Commonwealth had implemented a severance tax in 2012.
RESOLVED, THAT THE HOUSE OF REPRESENTATIVES DIRECT THE
LEGISLATIVE BUDGET AND FINANCE COMMITTEE TO CONDUCT A STUDY TO
EXAMINE TAX STRUCTURES THAT EXIST AS OF JUNE 30, 2023, WITHIN
THE TOP FIVE NATURAL GAS PRODUCING STATES IN THE UNITED STATES
AND SUBMIT A REPORT WITH ITS FINDINGS TO THE GENERAL ASSEMBLY
WITHIN ONE YEAR OF THE ADOPTION OF THIS RESOLUTION; AND BE IT
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FURTHER
RESOLVED, THAT, AT A MINIMUM, THE REPORT INCLUDE ALL OF THE
FOLLOWING INFORMATION:
(1) THE STRUCTURE OF ANY SEVERANCE TAX OR IMPACT FEE
IMPOSED WITHIN EACH OF THE TOP FIVE STATES.
(2) THE FACTORS THAT IMPACT THE CALCULATION OF THE TAX
OR FEE IN EACH STATE UNDER PARAGRAPH (1), INCLUDING ANY
REDUCED INTRODUCTORY TAX RATE, CAPITAL INVESTMENT RECOVERY OR
OFFSETS OF THE TAX OR FEE AGAINST OTHER TAXES OR COSTS BORNE
BY THE PRODUCER.
(3) OTHER TAXES IMPOSED BY EACH STATE UNDER PARAGRAPH
(1) UPON NATURAL GAS PRODUCERS AND HOW THEY ARE SHARED WITH
ROYALTY OWNERS;
AND BE IT FURTHER
RESOLVED, THAT THE REPORT ALSO EXAMINE AND SEEK TO IDENTIFY
UNIQUE FACTORS WITHIN EACH OF THE TOP FIVE STATES THAT IMPACT
THE COMPETITIVE BUSINESS CLIMATE WITHIN EACH STATE, INCLUDING,
BUT NOT LIMITED TO, THE FOLLOWING FACTORS:
(1) PERMITTING REQUIREMENTS, TIMELINES AND ASSOCIATED
COSTS IN PREPARING AND OBTAINING NECESSARY OPERATING PERMITS.
(2) GEOLOGICAL CONDITIONS, INCLUDING DEPTH, THICKNESS,
IRREGULARITIES IN FORMATION AND OTHER FACTORS THAT MAY IMPACT
ACCESS TO THE RESOURCE.
(3) GEOGRAPHIC CONDITIONS THAT IMPACT OPERATIONAL COSTS,
INCLUDING TERRAIN, MILES OF WATERWAYS AND THE AMOUNT OF
FEDERAL AND STATE LANDS EXCLUDED FROM DEVELOPMENT.
(4) CLIMATE CONDITIONS THAT IMPACT OPERATIONS, INCLUDING
SEASONAL TEMPERATURE FACTORS, OTHER WEATHER CONDITIONS AND
RELATED REGULATORY OPERATIONAL RESTRICTIONS.
(5) AVAILABILITY AND ACCESS TO SUFFICIENT GATHERING,
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PROCESSING AND TRANSPORTATION INFRASTRUCTURE WITHIN THE STATE
TO ACCESS MARKETS.
(6) HISTORICAL NATURAL GAS MARKET PRICE DIFFERENCES
WITHIN THE STATES AND HOW EACH STATE'S PRICES HAVE COMPARED
TO THE NEW YORK MERCANTILE EXCHANGE (NYMEX) INDEX PRICE FOR
NATURAL GAS OVER THE LAST DECADE.
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