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Democrat Chair of Senate Environmental Committee Introduces Severance Tax bill…Republican Policy Chairman Co-sponsor and advocate.

Democrat Chairman of the Senate Environmental Resources and Energy Committee held a press conference to announce the introduction of a severance tax bill, SB 905. To watch a segment of the press conference, click here. To read the bill, click here. The bill would impose a severance tax of 2 percent of the gross value of the natural gas severed at the wellhead; this tax rate would be in place for the first three years of well production;
• When the well has been in production for more than three years, the tax rate would
increase to 5 percent;
• The tax rate would readjust back to 2 percent if a well’s rate of production fell below ISO
MCF of natural gas per day and above 60 MCF per day;
• Wells that produce less than 60 MCF of natural gas per day are exempt from the tax.
If implemented, the severance tax would go into effect on July I, 2011.
According to Yudichak, revenue from the severance tax would be distributed to three
program areas:
• 33 percent of the revenue generated to the Commonwealth Financing Authority for water
supply, wastewater treatment, stormwater and flood control projects;
• 33 percent to the Environmental Stewardship Fund (Growing Greener); and
• 34 percent to local governments in those areas of Pennsylvania that are experiencing the direct effects of natural gas drilling.
Joining Yudichak at the news conference was state Senator Edwin “Ted” Erickson (R-Delaware), a co-sponsor of Senate Bill 905.
“I am pleased to stand with my colleague, Senator Yudichak, to support this much needed legislation,” Erickson said. “The fact that this bill has bipartisan support shows the need for this tax goes beyond partisan politics. I believe this bill invests the tax revenues in a responsible way for the protection of our environment and the communities directly affected by the expanding natural gas industry.”

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