Truth About Marcellus Shale

Member Group : PA Chamber of Business and Industry

November 2011
Pennsylvanians concerned about responsible Marcellus Shale oversight should look past opponents’ campaign of misinformation

As lawmakers debate legislation to ensure that Pennsylvania remains a competitive Marcellus Shale drilling state, opponents continue their orchestrated campaign of misinformation designed to discredit the industry. While the proposal on the table balances important protections for public health and the environment with the opportunity for news jobs and additional revenue for the Commonwealth, its detractors are only serving to cloud a very complex but important discussion about the industry’s responsible growth.

"Free pass" complaint not supported by facts…
Last year, one radical environmental group praised the Rendell administration for passage of two "key" regulations designed to protect drinking water and rivers and streams from drilling waste water – rules that now hold drillers to a much higher standard for Total Dissolved Solids pollution than any other industry, and that require waste water to be treated to drinking water standards. This group also applauded the prior administration for increasing Department of Environmental Protection staff in order to beef up drill site regulation and inspection. (The oil and gas program now has 202 employees, up from 100 in 2008.)

Effective oversight of the industry continued with the Corbett administration. Earlier this year, DEP Secretary Mike Krancer stopped the practice of taking waste water to facilities that were grandfathered in to state regulations sharply restricting salty discharges; levied the largest fine in Pennsylvania history against a Marcellus Shale drilling company; and spearheaded the reorganization of an entire agency to better meet the increased responsibilities of overseeing the industry.

Yet in a recent missive against House Bill 1950 – a well-thought-out and carefully crafted oversight bill that would increase civil fines and penalties for violations; provide revenue to address local impacts from drilling; and establish reasonable setback distances between well pads and private wells and waterways – this environmental group still tried to claim that the industry is getting a "free pass." The actions of two administrations demonstrate this is not true.

…nor is "fair share" rhetoric
The purposely used but misleading "free pass" rhetoric also carries over to the subject of taxation, as evidenced by organized labor’s recent radio spots, which claim that "many of the companies don’t pay any taxes." Denying that the Marcellus Shale industry is in fact paying its "fair share," opponents compare Pennsylvania to other drilling states in arguing for a severance tax on natural gas. The problem is that comparing proposed severance tax/impact fee rates in Pennsylvania with tax rates in other drilling states is apples to oranges because overall business climates, all applicable taxes and tax rates vary. Any industry fee or tax that is ultimately decided on here would be on top of a Corporate Net Income tax rate that is effectively the highest in the nation at nearly 10 percent (Pennsylvania is the only state that assesses both a CNI tax and a tax on business assets).

According to the Department of Revenue, tax collections from mining, which includes natural gas drilling, increased by a staggering 592 percent over two years, while other industries’ tax payments increased by a mere 1 percent. The department has also reported that the industry has paid $1.2 billion in taxes since 2006, and through August 2011, these companies had already paid $306.9 million in corporate, personal income, sales and employee withholding taxes, more than all of 2010.

An additional revenue source from drillers is the cost of permit fees, which totaled $12.5 million in fiscal year 2010-11 and is expected to be $15.4 million in for the current fiscal year.



In addition, Pennsylvania receives revenue for state forest land leases associated with Marcellus Shale natural gas production. Since 2008, the lease of 138,866 acres generated $413 million in revenue for the state.

Natural gas companies are paying their "fair share." And impact fees being considered in H.B. 1950 would bring in more revenue, ensuring that local municipalities receive adequate funds to address impacts from drilling operations taking place within their borders.

Yet, this is not enough for opponents. The crux of their entire campaign against one of the most positive economic developments in the Commonwealth in recent memory is that no amount of oversight will suffice unless the industry is taxed at a level only they deem appropriate and the revenue is deposited into the General Fund to pay for any number of big government programs. In this regard, opponents’ message is very clear.

Contact: Lesley Smith, director of communications, 717 720-5446.

The Pennsylvania Chamber of Business and Industry is the state’s largest broad-based business association, with its membership representing nearly 50 percent of the private workforce. More information is available on the Chamber’s website at

Pennsylvania Chamber of Business and Industry
417 Walnut Street, Harrisburg, PA 17101, Phone 800 225-7224, Fax 717 255-3298,