On Tuesday, July 8, 2014, the Pennsylvania State Senate passed the Commonwealth’s fiscal code by a margin of 26 to 22. Included within the fiscal code, as a companion piece to the legislation, were provisions critical to the Commonwealth’s commitment to future natural gas development on state lands. Specifically, the fiscal code included measures which: 1) allow drilling for natural gas on state land; and 2) separate regulations applicable to conventional oil and gas drilling from unconventional drilling. The measure was passed by the Pennsylvania State House last week and is now awaiting the signature of Governor Tom Corbett.

Prior bills seeking to differentiate regulations imposed upon conventional and unconventional drilling failed to survive review by the State Legislature. Consequently, the inclusion and passage of both measures in conjunction with the fiscal code have drawn the ire of Governor Corbett’s political opposition as lacking transparency and circumventing the legislative processes of debate and discourse. Moreover, prior to passage of the fiscal code by the State Senate, concerns were raised by opponents of the measure (which was comprised of more than 31 separate provisions, some of which were unrelated) that the bill violated the single-subject provision of the Pennsylvania Constitution. However, despite that argument, the fiscal code, and the pro-Oil and Gas Industry provisions included therewith, passed.

It is anticipated that Governor Corbett will sign the measures into effect, as doing so will enable him to fulfill his recent promise to lift former Governor Ed Rendell’s moratorium on additional leases of public land. The result will certainly be a mutually beneficial result for oil and gas operators and the Commonwealth as it will renew oil and gas operators the potential ability to develop previously inaccessible public lands, while raising an estimated $95 million for the state budget.