Feb. 9, 2012
A local organization active in efforts to reform natural gas leasing in Maryland praised Sen. George Edwards this week for his proposal of a “Natural Gas Impact Fund,” which the state could use to pay for environmental issues associated with gas exploration and drilling.
The bill Edwards introduced, SB 768, would direct state agencies charged with regulating gas-drilling to make allocations from the impact fund for remediation in Garrett and Allegany counties “not attributable to a specific company at a specific site.”
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Funding would come from a 2.5 percent severance tax, or production tax, on gas at the well-head, once a well is connected to a pipeline.
“We are encouraged not only by the efforts of Del. [Wendell] Beitzel and Sen. Edwards to secure much-needed protections for those who lease land for shale gas development, but it is also very gratifying to see the senator recognize our environment’s importance,” said CitizenShale acting director Natalie Atherton.
The 2.5 percent state tax would augment another 5.5 percent county production tax already in place in Garrett (and being proposed for Allegany) County. Atherton said the total 8 percent tax would put Maryland’s rate “in the middle of the pack” nationally, and roughly equal to that of West Virginia. Pennsylvania lawmakers continue to grapple with impact fees, but the gas industry has avoided all severance taxes, according to Atherton.
Maryland law also gives state regulators the authority to impose impact fees for costs and risks associated with drilling, such as damage to roads and the need for additional enforcement. State agencies are in the process of developing those fees; announcements are expected later this year.
No gas wells have yet been permitted in Maryland as the state completes a review process (which Atherton said is recognized nationally as the country’s most thorough) in the search for what Gov. Martin O’Malley has called the ” gold standard” in regulation.
Edwards is one of five local representatives appointed by O’Malley to a special commission studying the potential effects of gas-drilling using the controversial technique known as hydraulic fracturing. Contamination of water wells and aquifers in several states has been reportedly linked to “fracking.”
In his executive order creating the commission last year, O’Malley identified passing a state severance tax as his top priority.
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