MSC in Scranton Times-Tribune: Recent editorials advance misguided policy

Editor: Policies advanced in two recent Times-Tribune editorials are misguided and represent bad public policy.

A proposal regarding natural gas lease agreements (“House whiffs on fair gas royalties,”Oct. 12) ignores settled case law, for which the solution proposed is an unconstitutional effort to change existing contracts. The severance tax proposal pushed by Gov. Tom Wolf and supported by an Oct. 21 editorial (“Fair gas tax closer to reality”), would harm the commonwealth’s competitiveness, cost good-paying jobs and increase home energy costs for consumers.

Regarding natural gas lease agreements, the Pennsylvania Supreme Court affirmed and upheld that royalties are properly calculated by deducting the costs associated with getting natural gas to market. When the court issued a ruling in 2010, it never asked for legislative clarification and made clear the guaranteed one-eighth minimum is properly calculated by deducting post-production costs. Just like any contract, if there is a dispute over terms, the courts, not politicians, are the best venue to resolve it.

As to taxing natural gas, Pennsylvania has a significant tax called the impact fee. It has generated nearly $1.5 billion in new revenue over the past few years, with revenue benefitting Philadelphia and its surrounding counties where no drilling occurs. Combined with other business taxes, natural gas development has generated billions of dollars in Pennsylvania revenue over the past few years.

Ironically, additional energy taxes also would burden royalty owners — the group that’s the focus of the newspaper’s Oct. 12 editorial — who would bear a share of that tax burden.

We have a generational opportunity to leverage this low-cost, abundant shale resource into long-term economic, environmental and national security gains. But the policies advocated in these editorials would close the door to energy investment and stand to hurt Pennsylvanians.

David Spigelmyer
Marcellus Shale Coalition

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