By: Larry J. Schweiger
Governor Wolf will soon be signing a House Bill 732 and thereby pumping nearly $700 million in additional tax credits to the fracking industry. Wolf claims to be concerned with climate change but is willing to subsidize more carbon dioxide and methane pollution during a record-breaking heatwave sweeping the Nation.
As just one indicator of the growing threat from the climate crisis, this week, nearly 90% of the U.S. population will be experiencing extreme heat of more than 90 degrees F. This is just the beginning of our troubles. At the current pace, the U.S. will be experiencing more floods, crop, and fire losses exceeding a trillion dollars in a single year. The world’s top climate scientists organized through the Intergovernmental Panel on Climate Change have warned that we are running out of time to bend the curve on emissions to prevent dangerous levels that trigger the worst impacts of the climate crisis when the world exceeds the 1.5° Celsius threshold.
The October 2018 Intergovernmental Panel on Climate Change’s report states that “limiting global warming requires limiting the total cumulative global anthropogenic emissions of CO2 since the pre-industrial period, that is, staying within a total carbon budget.” The report further states that “pathways limiting global warming to 1.5°C with no or limited overshoot would require rapid, and far-reaching transitions in energy, land, urban, and infrastructure (including transport, and buildings), and industrial systems. These systems transitions are unprecedented in terms of scale, but not necessarily in terms of speed, and imply deep emissions reductions in all sectors, a wide portfolio of mitigation options, and a significant upscaling of investments in those options.”
Despite being financially-strapped in the middle of a pandemic and unable to meet the increasingly unmet basic needs of so many struggling Pennsylvanians, the legislature is giving almost $670 million in tax credits to the fracking industry. This corporate welfare received 163 “Yes” votes in the House versus only thirty-eight lawmakers who voted “No.” You can see how your House member voted here. Most opponents were southeastern Pennsylvania Democrats. The Senate voted 40 to 9 with Senator Costa and Senator Williams as the only two western Pennsylvania Senators to vote against this massive giveaway. The Senate vote is here.
Entrenched crony capitalism in Harrisburg ignores the dire environmental threats by investing in a sector that cannot persist in the face of a climate crisis. Crony capitalism is choking free enterprise, unduly burdening taxpayers, and thwarting the insurgent clean energy industry while threatening our climate system with permanent damage.
The legislation was sent to the Governor on July 15th. He has made it clear that he will sign this bipartisan bill so long as the receiving corporations pay prevailing wages. The Governor listened to the construction trade unions who were demanding that these gas-powered projects pay union-scale wages for construction but completely ignored the concerns of environmental organizations warning about increased climate risks, declining air quality, and increased water pollution that threatens families living near fracking wells and infrastructure.
This massive tax giveaway will be granted to four proposed but undisclosed fracking facilities. Unlike the previous massive giveaway to Shell, the four recipients of this tax break have not been disclosed to the public, perhaps because they have tarnished records. We should understand that the politicians know who is lobbying for this tax-giveaway and where the money will go. The secret recipients have no additional requirements for preventing methane and carbon dioxide pollution but must meet a minimum capital investment of $400 million and create 800 temporary construction jobs with no further requirement for permanent jobs at the facilities.
Pennsylvania will now on the hook for nearly $2.3 billion in fracking subsidies. This new subsidy is on top of the $1.6 billion Shell deal. In 2012, Governor Corbett and Republican legislators gave Shell a $2.10 tax credit for every barrel of ethane it buys from Pennsylvania’s fracking operators, 15 years of tax breaks, and other exemptions because the site is an expanded Keystone Opportunity Zone.
Tax subsidies have real consequences in terms of revenue forgone, depleting the Commonwealth’s capacity to pay for education, environmental protection, and a myriad of other vital state services. Instead of paying taxes like the rest of us, the fracking industry is freeloading. When they go bankrupt as several already have, they will leave pollution and mess for us to clean up.
Don’t be misled about the industry’s claims of paying impact fees. These fees are in-leu of the high cost of bonding bridges and roads that are often ruined by heavy truck traffic. At the same time, the fracking industry, the Chamber of Commerce, and Republican lawmakers have been blocking a severance tax even though eighty percent of the frack gas flows out of state, and much more will flow to international markets when the several pipelines are completed to export hubs.
Such generosity by lawmakers and the Governor has a root cause and it is not a good one. We must confront laissez-faire and crony capitalism. Big oil and gas giants like Shell have a belligerent sense of entitlement wherever they operate. Fossil fuel interests are rigging Pennsylvania’s economy by implicitly threatening lawmakers with vast amounts of campaign money. Unchecked, corporate fascism is the culmination, and consequence of a failing, and rigged system. It is currently legal for special interest groups to bribe elected officials since there are lax limitations on the type, and amounts of gifts special interests can lavish on elected officials. Representative Tina Davis (D-Bucks County) introduced legislation in an attempt to address the widespread bribing of public officials. The bill sought to ensure that such bribery has no place Harrisburg. Unsurprisingly, the Davis bill was dead on arrival.
Pennsylvania’s Constitution has a uniformity clause that has stood the test of time and needs to be considered in light of massive tax giveaways. Article VIII, Section 1 of our state constitution states “all taxes shall be uniform, upon the same class of subjects, within the territorial limits of the authority levying the tax, and shall be collected under general laws.” This vital “uniformity” provision is designed to restrain the political temptation to give special advantage to lobbyists from one entity over another. Black’s Law Dictionary defines “uniformity” in taxation as “equality in the burden of taxation … in the mode of assessment, as well as in the rate of taxation.” The Pennsylvania Constitution establishes a high standard for tax “uniformity” and fairness that is currently being ignored by the General Assembly and the Governor when it comes to taxing the fracking industry.
In the case of Commonwealth v. Jamestown & Franklin Railroad Company, the Pennsylvania Supreme Court ruled in 1900 that uniformity “not only applies to taxing statutes but also to the methods by which they are administered.” The massive tax benefits given to the fracking industry producing energy in competition with clean energy corporations appears to violate these standards. The standard applied in the Jamestown & Franklin Railroad case, the court ruled that all railroad companies be taxed the same. With that standard, all energy companies are of the same class and must therefore must be taxed the same. However, industry lawyers will argue that the determination of the “same class” is subject to interpretation.
Instead of investing tax subsidies to a polluting industry, the Commonwealth must advance clean energy opportunities and options. Top scientists have long been warning us that we must end fossil fuel burning to stay below 1.5-degrees C. warming to avoid dangerous and uncontrollable levels of climate change. As we are dangerously close to that tipping point, we must act with a warlike footing not seen since WWII to avoid deadly droughts, mass starvation, dread diseases, fierce storms, and widespread floods, forest fire destruction, forced migrations, and border wars. The voters of Pennsylvania must hold lawmakers accountable for their bad choices favoring a polluting industry when they should be helping those facing hard economic times with a raging pandemic.