LEWISBURG - Two members of Gov. Ed Rendell's cabinet expressed strong support over the weekend for a severance tax on natural gas extracted from the Marcellus Shale.
They also had harsh words for politicians claiming such a tax would hamstring gas development still in its infancy in Pennsylvania.
State Department of Conservation and Natural Resources Secretary John Quigley and state Department of Environmental Protection Secretary John Hanger offered comments during Bucknell University's Institute for Public Policy Symposium.
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The symposium focused on community and environmental impacts of the gas industry in the Marcellus Shale.
Quigley, the keynote speaker on Friday, spoke out against the "no-tax, no-spend mentality that coddles a so-called infant industry."
Quigley said the gas industry in Pennsylvania is far from new. The companies involved in gas exploration, such as ExxonMobil, are "well capitalized" and among the largest corporations in the world, he said.
"There is nothing poor about the industry. There is nothing infant about the industry," Quigley said. "They are among the largest companies in the world.
"It is a big-pocketed industry that can bring a big microphone and maybe more than that. ... The citizens of this state have been had by the likes of ExxonMobil."
Quigley said the 14 other states where gas production occurs have a severance tax, defined as a tax on a natural resource "severed" or removed from the ground.
It is fair to make those companies pay for the impacts they have on local communities, he said.
"We need to tax the industry in a reasonable manner," he said. "The gas isn't going anywhere and neither are the companies."
Quigley questioned an industry-funded study that showed the industry already has infused the state with millions of dollars and 160,000 jobs over the last two years.
"The prospect of 160,000 jobs is nothing to sneeze at, but it could be a little optimistic," he said. "It may be likely the industry-funded study may overstate the case."
Quigley also expressed concern at the amount of state forest land leased for gas drilling. One-third of the land has been leased, he said. Rendell opposes further leasing, he said, but there are some people in the state Legislature who favor leasing all state land for gas exploration.
With the possibility that thousands of gas wells could be drilled on state land over the next 20 years, the state is in danger of seeing one of the best managed forests in the United States severely degraded, he said.
"The fragmentation of the forest is going to be vast," he said.
Quigley added that the state does not own the mineral rights to 75 percent of the land on which Pennsylvania's state parks are located. One company is interested in doing seismic testing on every inch of Ohiopyle State Park, he said.
Hanger, who spoke on Saturday, had similar words for the gas industry.
According to Hanger, gas companies working in Pennsylvania "are not mom and pop operations.'
"Give me a break," Hanger said of the idea that companies here are small, fledgling operations. "Companies (in Pennsylvania) range from significant to some of the biggest in the world."
"Privately, the industry is laughing at us," he said. "We are being played for chumps. West Virginia has a tax. I think we are at least as bright as West Virginia."
Hanger said he favors a severance tax that should not be the highest or lowest in the country, but somewhere in the middle.
"We absolutely must move forward to properly tax the industry," he said. "Natural gas drilling is an industrial activity. It has an impact (the state) should be compensated for."
Hanger said the DEP is working on strengthening gas well construction standards and imposing stricter standards on the amount of total dissolved solids that can be discharged into rivers and streams.
"Rules and regulations are not where they need to be," Hanger said.
Hanger credited several gas companies for coming forward and saying the standards were not strong enough.
He said some gas companies clearly plan on being in Pennsylvania for a long time and want to be good citizens. Other companies do not, he said.
State Sen. E. Eugene Yaw, R-Loyalsock Township, who served on a panel during Saturday's symposium, said he does not oppose a severance tax. However, Yaw said he will not support any of the tax proposals he has seen so far.
Any decisions made about the tax have to benefit the communities impacted by gas development, he said.
"The primary reason is there has been no plan that I would go along with that will protect our interest in rural Pennsylvania," he said. "Most severance tax proposals are created in urban (legislative) districts. Local municipalities are not getting what they should out of this."
Yaw said a severance tax has to be studied "in depth" while taking into account the fact that the state has taxes that other gas producing states do not.
Yaw added that gas production is just ramping up. At this point, it would bring very little revenue to the state, he said.
"I want to wait until the right time, and in my opinion, this is not the right time," Yaw said.
