Inquirer Editorial: Siding with drillers
Since there has been so little of it, let's start with the positive news about the Corbett administration's handling of natural-gas drillers.
Since there has been so little of it, let's start with the positive news about the Corbett administration's handling of natural-gas drillers.
Department of Environmental Protection Secretary Michael Krancer has rescinded, wisely, his order requiring inspectors to obtain approval from DEP political appointees before enforcing environmental regulations against drillers. This misguided policy lasted all of five weeks.
The policy was initiated March 23, ostensibly to improve the consistency of enforcement actions. But the news raised a storm of protest, and the DEP has seen the error of its ways. Krancer now says his original directive was misinterpreted.
Unfortunately, Krancer can't completely un-ring this bell. He has served notice to DEP field agents that their citations against drilling companies will receive special scrutiny at the top ranks of the DEP. It could still have a chilling effect on inspectors.
The DEP reports to Gov. Corbett, and everyone knows where the governor stands on drilling. It certainly appears that state Revenue Secretary Dan Meuser understands the governor's position on drilling. Meuser gave his opinion this week that drilling companies in the methane-rich Marcellus Shale region "are paying their fair share" of taxes.
With all due respect to Meuser, a state revenue secretary should be monitoring the rate of tax collections, not giving a pass to corporations in a debate over which industries are pulling their weight. Then again, he is Corbett's revenue secretary, and Corbett has made it abundantly clear that there shall be no production tax on natural-gas drillers.
Meuser weighed in after the Pennsylvania Budget and Policy Center, a left-leaning think tank in Harrisburg, reported drillers had paid only $38.8 million in state business taxes in 2008. The industry disputed that figure, and the revenue secretary sided with drillers, saying they have paid $1.1 billion in taxes since 2006.
However, Meuser's number includes not only drillers, but companies that have sprouted up around them, such as firms selling sand for the high-pressure drilling technique called fracking. Meuser also was counting employee withholding taxes.
When reporters drilled deeper, the Revenue Department said drilling companies had paid $98 million in corporate net income taxes to the state in 2010. They're on a pace to pay more than four times that amount this year.
But that still doesn't justify Corbett's giving drillers a pass by refusing to charge a production tax, a levy imposed by all other major gas-producing states.
Drillers also don't pay property taxes in Pennsylvania, as they do in many other states. And equipment used for oil and gas production is exempt from Pennsylvania's sales tax, unlike in many other states.
The industry is already receiving significant tax breaks in Pennsylvania. The failure to charge a production tax on natural gas, while the cash-strapped state is cutting essential services, just isn't right.
