The Dark Side of Pennsylvania's Severance Tax Battle

Pennsylvania’s political battle over a severance tax on natural gas extraction was recently chronicled by Alexander C. Kaufman in This Is What It Looks Like When An Industry Controls A State’s Politics. However, the real tale that has culminated in this year’s round in the severance tax debate is a much darker one than Kaufman writes.

It’s the story of addiction, not to the gas itself, as is so often how our reliance on fossil fuels is described, and not even to the revenue that could be brought into the state coffers with a tax, but to the mere idea of revenue. It has made junkies of Democratic leaders whose habits have driven them to deal in desperation with their stingy pushers.

The proof is in the severance tax deal that would be law right now, if not for House Republicans’ rejection of the plan at the behest of the industry whose campaign contributions keep them on short leashes. The Democratic governor and 12 of the state’s 16 Democratic senators were willing to eviscerate the Department of Environmental Protection’s oversight of the oil & gas industry in exchange for a paltry severance tax of $0.02 per thousand cubic feet of gas extracted. The plan would have created third-party reviews of permits by consultants hand-picked by the industry and shortened the period of time the agency has to conduct permit reviews in the first place. The Wolf administration is still pushing for a severance tax and is open to negotiating with the industry. “If I can just get my fix, I can make everything alright,” the addict thinks.

Pennsylvania’s government is broken. Adding a projected $108 million to the state’s General Fund won’t solve our problems. Tethering education and other programs worthy of sustainable solutions to a boom/bust industry that has already gone through a bust at least once in the past decade isn’t the answer.

Promoting a severance tax as a panacea for the state’s budget woes is nothing more than a catchy campaign promise trotted out by Democrats who have become more preoccupied with getting elected than with what they’ll do if they win. Candidate Wolf’s Classroom showed him explaining to grade school students that he’d pay for their education with the stuff under their seats. Was he even thinking of the tens of thousands of public school children who attend classes within two miles of natural gas wells, who are captives in their classrooms to polluted air, who are too close to wells, in some cases, to be able to escape if explosions or fires occur on nearby well pads? Was he thinking of the climate crisis every public school student will inherit as a result of his flawed platform? No. Addicts are blind to the damage they do to those around them.

Addiction is a disease and, in Pennsylvania, Ed Rendell is Patient Zero. He admitted as much during a Politico event when the DNC held its convention in Philadelphia in 2016. He said, “I made a mistake in the rush to get the economic part of fracking delivered to Pennsylvania” by putting economics above environmental protection. He immediately walked back his comments. He made an important first step toward recovery with his admission, but beating addiction is hard work.

Six peer-reviewed studies on fracking had been done when Rendell opened the state to shale gas development. There are now more than 900. Since Rendell made his regrettable decision, the state has become a regulatory wild west. State lawmakers and regulators have made one bad policy decision after the next. Fracking has had profound adverse impacts on public health, safety, economics, and quality of life. The climate crisis has accelerated. This country has elected someone who has rolled back environmental protections, promoted dangerous expansion of fossil fuels, removed climate change data from federal websites. He pulled the U.S. out of the Paris Climate Agreement. When he did, 10 Democratic governors pledged to honor the agreement. Wolf was not one of them.

Pennsylvania’s Democratic State Committee attempted an intervention in 2014 when it passed a resolution calling for a moratorium on fracking. The vote was sharply criticized by Rendell and the party’s gubernatorial candidates. Since then, things have gone from bad to worse. In part, it’s due to a strategically wise decision on the part of the industry in 2012 to agree to an impact fee on drilling, budging just enough to keep the state on the hook.

Pennsylvania has a tax on extraction, but it’s called an impact fee because the Republican governor who imposed it had taken Grover Norquist’s “No New Taxes” pledge. Nevertheless, the state has received more than $1.2 billion since the impact fee was first instituted. Although millions of dollars collected have been spent inappropriately on things other than impacts, they have not gone into the General Fund.

And it is that move that has made truly desperate addicts of Democratic leaders. The dollars are so tantalizingly close, they can practically touch them. Before tossing the DEP under the bus in this latest budget cycle, Governor Wolf spent his time in office demonstrating that he would do anything to not just enable the industry, but expand its reach. He has functioned as salesman-in-chief for the industry, expanding the base of institutional natural gas customers with his PIPE program, overseeing the approval of more than 40 new natural gas power plants, attempting to manufacture consent for the pipeline side of the business with his Pipeline Infrastructure Task Force, supporting turning Philadelphia into a gas hub, and going all in on ethane extraction, processing, and transmission, publicly supporting the $1.65 billion dollars given in tax breaks to Royal Dutch Shell to build an ethane cracker in western Pennsylvania and issuing a report shortly thereafter saying that part of the state can support four more crackers. Crackers are processing plants that harvest ethylene by cracking open ethane molecules. The ethylene is used to make single-use plastics, like grocery bags.

His efforts are in vain. It’s time for Wolf and the Democrats in our legislature to admit that they will never get a severance tax. If they can take that first bold step out of addiction, then they’ll see that their other main justification for allowing the industry to run roughshod over the state – jobs, jobs, jobs – doesn’t hold up either. They’ll have to come to grips with the vast amount of damage they’ve done to Pennsylvanians, their communities, and their natural resources. They’ll be forced to see that the rest of the world has been visiting Pennsylvania, the world’s negative role model on fracking, and that the jarring experiences of those visits have informed decisions by other states and countries to ban fracking. They’ll have to come to terms with the fact that they have regularly violated the state’s constitution by ignoring Article 1, Section 27, the strongest Environmental Rights Amendment in any state constitution in the country. And they’ll have to figure out how to respond when their grandchildren ask them why they worked to exacerbate climate change when they had the chance to be climate leaders instead.

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