





































Leaving Money on the Table: Pennsylvania Exceptionalism in Resisting Energy Severance Taxes


COMMONWEALTH, Volume 19, Issue 1 (2017). © 2017 The Pennsylvania Political Science Association.  
ISSN 2469-7672 (online). http://dx.doi.org/10.15367/com.v19i1.131. All rights reserved.

Leaving Money on the Table

Pennsylvania Exceptionalism in Resisting  

Energy Severance Taxes

RACHEL L. HAMPTON
University of Michigan

BARRY G. RABE
University of Michigan

Nearly all energy- producing states elect to adopt and sustain a tax on the extrac-
tion of their oil and gas resources through so- called severance taxes, generating 
significant revenue for general as well as specialized state funds. Political support 
for such taxes generally crosses party lines and endures across multiple partisan 
shifts in the political control of a state. This reflects numerous features that tend 
to make these taxes quite popular and durable across election cycles. This long- 
standing pattern, however, faces one major exception: Pennsylvania’s enduring 
reluctance to follow the path of other major energy- producing states and adopt 
such a tax. This article explores what it deems “Pennsylvania exceptionalism,” 
as it seeks to address the issue of why one leading energy- producing state would 
refrain from tax adoption in contrast to every other such state. It places particu-
lar emphasis on the past decade, in which natural gas in shale deposits has trig-
gered a dramatic expansion of production in Pennsylvania and ongoing political 
controversy over whether or not a severance tax should be adopted.

Energy production in the United States is not a new phenomenon. 
Large- scale oil drilling formally began before the Civil War in Penn-
sylvania and expanded to many other states by the turn of the twen-

tieth century, alongside extensive extraction of coal and natural gas. By 1902, 
one oil well in Spindletop, Texas, had produced over 17 million barrels of oil 



6 raChel l. hampton anD Barry G. raBe

and the state has since remained a leading producer of both oil and natural 
gas. Texas and many other producing states moved fairly rapidly to establish 
some tax on output, in some cases relying upon this as a major revenue source. 
By the 1990s, though, many states assumed that their oil and gas production 
would plummet as supplies declined, likely leading to reduced reliance on 
severance tax revenue in the future.

The mid-2 000s, however, saw the development of hydraulic fracturing and 
horizontal drilling techniques that allowed many states to tap into previously 
unavailable resources, such as oil and natural gas found in shale deposits. In 
some cases, states with long energy extraction histories got a new lease on 
life as a major energy producer. North Dakota, for instance, experienced a 
boom of oil extraction starting around 2006. Such development created sig-
nificant growth in the state’s economy as its gross domestic product rose and 
unemployment rates dropped. The state’s population grew for the first time 
in decades (Rabe and Hampton 2016), with particularly significant growth in 
localities near shale development. Other states, such as Colorado, Oklahoma, 
and Texas, also fit this pattern. But perhaps no state has stood out as has Penn-
sylvania in this new era of energy production. The state assumed a prominent 
role in the debate over hydraulic fracturing as it pursued its substantial natu-
ral gas deposits embedded in the Marcellus Shale. The state also experienced 
a significant economic boom related to expanded fracking, while it gained 
national notoriety over controversies related to the practice, including possi-
ble risks to water, land, air, and public health. In many respects, Pennsylvania 
emerged as a leading face of hydraulic fracturing, reflected in popular films 
and considerable media attention.

But despite changes in energy production throughout the United States, 
many states that engaged in the industry preserved the status quo, especially 
regarding their fiscal regimes (Rabe and Hampton 2015). More specifically, 
states mostly maintained existing taxes on the extraction of their oil and gas 
resources. These taxes, known as severance taxes, are not a foreign concept 
to production states; in fact, they are the norm for nearly all petro- states in 
the United States, except Pennsylvania. Such broad acceptance of these taxes 
makes it arguably more intriguing that a poster child of the hydraulic fractur-
ing movement does not have one.

This article explores the status of severance taxation in the United States. 
It describes these taxes and considers why most states—including all other 
major oil and gas producers—employ them. It further focuses briefly on their 
structure and use, while also touching on any perceived benefits and conse-
quences, before turning to the question of why only one state has not enacted 
such a tax.



Leaving Money on the Table 7

In particular, this article responds to the question of why Pennsylvania, 
a major player in the U.S. energy sphere, has failed to go where virtually 
every other oil-  and gas-p roducing state has gone before in neglecting to 
enact a severance tax. It notes that the state’s exceptionalism—its failure to 
implement a severance tax—spans the three governorships that have existed 
during the time of increased natural gas production in the state starting in 
the mid- 2000s. This article also addresses the consequences of such a deci-
sion, including direct defiance of public support for a severance tax and a 
loss of realizing potential revenues from it during difficult fiscal times in 
Pennsylvania.

Severance Taxes

At its core, a severance tax is a tax on the extraction of a nonrenewable natural 
resource like timber, uranium, or coal. But most significant in terms of total 
revenue, severance taxes are levied on the extraction of oil and natural gas. 
Such taxes are levied in some form in 38 states, and of the top 15 oil-  and gas- 
producing states, all employ a severance tax except Pennsylvania (see Table 
1). As a result, at least in the state energy realm, severance taxes are nearly 
universally adopted.

Severance taxes are also levied in states regardless of partisan control of 
state government, and the taxes have survived through the exchanging of 
party control. Alaska has had a long- standing severance tax amid numerous 
Republican governors and legislatures as well as occasional Democratic lead-
ers. North Dakota political leanings have similarly been relatively conserva-
tive with Republican domination of both executive and legislative branches 
during much of recent decades. The state has two overlapping taxes, adopted 
in 1953 by the legislature and another adopted in 1980 via ballot proposition 
and constitutional amendment. During Republican administrations, both 
states also pursued constitutionally backed trust funds that allow each state 
to set aside tax revenues for permanent protection. Texas has maintained its 
severance taxes across eras of Republican, Democratic, and split- party gov-
ernment control, as has been the case in states such as Arkansas, Colorado, 
Louisiana, New Mexico, and West Virginia, among others.

As far as state oil and gas severance taxes go, they are actually quite diverse 
in scope and form. They are referred to not only as severance taxes but also 
as production or conservation taxes, based either on the market value of the 
resource or the volume produced. These taxes range from rates that may be 
considered lower, like 1.3% of value, as is the case in Mississippi,1 to rates as 
great as 10% of production value of oil, as in North Dakota. Of course it is 



8 raChel l. hampton anD Barry G. raBe

misleading to consider only the rate of value or volume taxed because states 
also employ certain tax structures that include incentives and deductions that 
may lower the effective tax rate. Thus, for example, the Alaskan severance tax 
appears high in its net rate (35%), but this is deceptive, given the way it actu-
ally applies the tax (on net as opposed to gross value) and given its generous 
program of tax credits, which in recent years has exceeded total tax revenue.

Political Attractiveness of Severance Taxes

As discussed, almost every major producing state employs a severance tax. 
But why would so many states adopt such a tax, given the general controversy 
surrounding taxation and tremendous variation in how states establish taxes 
to address their fiscal needs? While many other taxes face almost guaran-
teed opposition, as demonstrated by the divisive state debates over proposed 
gasoline excise tax increases and carbon tax adoption, the severance tax is 
almost universally accepted. There seems to be a political agreement across 

table 1. top oil-  and Gas- producing states

top oil- producing 
states severance tax?

top natural Gas– 
producing states severance tax?

Texas Yes Texas Yes

North Dakota Yes Pennsylvania No

California Yes Oklahoma Yes

Alaska Yes Louisiana Yes

Oklahoma Yes Wyoming Yes

New Mexico Yes Colorado Yes

Colorado Yes New Mexico Yes

Wyoming Yes Arkansas Yes

Louisiana Yes West Virginia Yes

Kansas Yes Ohio Yes

Utah Yes Utah Yes

Ohio Yes Alaska Yes

Montana Yes North Dakota Yes

Mississippi Yes Kansas Yes

Illinois Yes California Yes

Sources: U.S. Energy Information Administration, Rankings: Crude Oil Production, June 2016 
(thousand barrels), available at www.eia.gov/state/rankings/#/series/46, accessed January 4, 2017. 
U.S. Energy Information Administration, Rankings: Natural Gas Marketed Production, 2014 (million 
cubic feet), available at www.eia.gov/state/rankings/#/series/47, accessed January 4, 2017. National 
Conference of State Legislatures, State Severance Taxes, 2012, available at http://www.ncsl.org/

4, 2017.  accessed January   collections.aspx, tax- severance- research/fiscal- state- policy/2011-



Leaving Money on the Table 9

the American states—with few exceptions—that if you extract oil or gas, you 
put a tax on what is removed from below the surface of the ground. In subse-
quent sections, we begin to explain the political appeal of these taxes.

Early Precedents
A number of states have had severance taxes for some time. In many instances, 
this began before multiple states and nations produced much oil and gas, 
thereby giving them considerable latitude in imposing a tax on a commod-
ity that was in great demand amid uncertain supply options. In Texas, for 
instance, the severance tax on oil was adopted in 1907, and it established an 
early and visible model that could be replicated as neighboring states or states 
in other regions tapped their own fossil fuel deposits in subsequent decades. 
Indeed, the Texas precedent demonstrated that a severance tax was politically 
feasible and quite popular. It also established a precedent to set aside some 
revenues for specific programs and build a constituency through trust funds 
for elementary, secondary, and higher education, setting the stage for diffu-
sion of these ideas across many states.

Easy Money and Tax Displacement
The most obvious reason a state might levy a tax on the extraction of oil and 
gas is for the considerable revenue that it might generate. Severance taxes are 
generally straightforward to adopt and implement, concentrated on points 
of production from drilling. So they can be fairly simple in their design and 
operation and do not require creation of a major staff to implement. Moreover, 
they offer the possibility of generating significant funds for a state that could 
substitute these revenues for other taxes, perhaps allowing maintenance of 
lower rates for highly unpopular taxes on income or sales. States have several 
options in setting up these taxes, whereby they can tax either the market value 
of the oil and gas that is extracted, the volume that is produced, or some com-
bination of these two (Brown 2013).

Revenues from severance taxes can be quite large in the states that pro-
duce significant amounts of oil and gas (see Table 2). For North Dakota, sev-
erance tax collections amounted to over $3 billion for the state in 2014. That 
same year, severance tax collections generated over $2 billion for Alaska and 
$6 billion for Texas. Standing alone, these revenues are significant, but they 
are also important in context; many oil- a nd gas- producing states rely on sev-
erance taxes to make up a significant portion of their total state tax revenue. 
In North Dakota, that $3 billion accounted for over 50% of the state’s total tax 
collection. In Alaska, its severance tax made up over 70% of the state’s total 
tax collection, while the percentage share in Texas was only 10%.



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12 raChel l. hampton anD Barry G. raBe

These revenues can fluctuate, given boom-and-bust cycles in production 
and commodity prices, as is further reflected in Table 2. However, severance 
taxes have allowed some states to not only suppress rates of other taxes but 
also avoid adoption of contentious taxes in some cases as long as they pro-
vide some ongoing revenue. Neither Alaska nor Wyoming, for example, have 
an income tax and have generally produced sufficient revenue from energy 
extraction taxes to keep an income tax off their state agendas.

Opportunity to Earmark Revenue and Build a Constituency
Beyond generating substantial revenues for a state, severance taxes enable 
states to create and maintain funds directed to specific purposes such as 
education, or addressing environmental concerns tied to production. Most 
prominently, several oil- a nd gas- producing states allocate severance tax rev-
enues to what are known as trust—or permanent—funds, following on the 
pioneering effort in Texas from the early twentieth century. These funds are 
traditionally protected by state constitutions and thus are designed to feature 
greater longevity than other state funds created only through statute (Rabe 
and Hampton 2016). States that use trusts funds include Texas, New Mexico, 
Wyoming, Montana, Alaska, and most recently, North Dakota, Utah, and 
West Virginia. As a result of these funds, oil-  and gas- producing states may 
be able to better protect themselves against any boom- or-b ust cycles that tra-
ditionally plague petro- states (Ross 2012).

This type of earmarking revenue from a specific tax can also create the 
opportunity for a state government to build a supportive political constitu-
ency through the targeted allocation of those funds. This linkage may foster 
considerable durability of the tax, given the recognition that its reduction or 
elimination could endanger a popular public benefit connected to the tax.2 
Alaska stands out as a prime example. After realizing how quickly any wind-
fall from oil production would be depleted, Alaskan governor Jay Hammond 
pushed for a trust fund that was ultimately adopted through constitutional 
amendment in 1976 (Groh and Erickson 2012). To further protect the fund, 
Hammond created the Alaskan dividend system whereby citizens of Alaska 
are sent a check—sometimes in amounts as high as $2,000—from the Perma-
nent Fund earnings each year (Moss 2012). Because of this allocation, citizens 
of Alaska have kept their eyes riveted on both the fund and the severance tax 
revenues that are allocated toward the fund, as evinced in recent debates that 
emerged starting in the mid-2 000s. For decades, any suggestion of reduced 
tax rates has been linked in the public mind with a possible loss of dividend 
revenue and proves extremely controversial. Other states have earmarked sev-
erance tax funds for popular programs, such as Wyoming’s linkage with a 



Leaving Money on the Table 13

significant scholarship program named after a popular former governor for 
students pursuing higher education at public institutions within the state.

Burden Shifting
Severance taxes are also attractive to energy- producing states because the 
burden of the tax is often passed along the production chain to out- of-s tate 
consumers (Mieszkowski and Soligo 2012). Many top producing states—such 
as Alaska, Louisiana, Montana, Oklahoma, Wyoming, and North Dakota—
are relatively low consuming states, meaning that more than 95% of their 
production is ultimately exported. Even major consuming states such as Texas 
and Pennsylvania export large amounts of the energy that they produce (U.S. 
Energy Information Administration 2014b). Severance taxes may thus be a 
relatively easy sell to constituents who might otherwise worry about the pos-
sible impact of a tax that is primarily applied to their consumption of energy.

This enables legislative supporters of a severance tax to claim political 
credit for imposing a cost on the removal of a natural resource that cannot be 
restored after use while knowing that most of the burden of any cost on con-
sumption will be borne in other states or nations. Producing states thus face 
few political consequences from constituents about imposing price increases 
and also gain a possible political benefit by creating ways to spend the rev-
enues for popular programs that they can sustain over time. There may well 
be parallels between the political attractiveness of severance taxes and other 
taxes that essentially export the costs, such as taxes imposed on vacations or 
business travel through hotel bills or rental cars. Dick Cheney recognized this 
as he defended high severance taxes while serving as Wyoming’s representa-
tive in Congress during the 1970s (Powers 1982).

Political Constraints on Severance Taxes

The nearly unanimous rate of severance tax adoption among oil-  and gas- 
producing states underscores the multiple factors that make them politi-
cally attractive despite their partisan control or geographic region. Their 
high political feasibility also translates into durability across various stages 
of implementation and multiple shifts of political leadership. No state has 
ever repealed an oil or gas severance tax that has been adopted and relatively 
few have undertaken major rate reductions after initial adoption (Rabe and 
Hampton 2015). This has even endured into the shale era, when overall pro-
duction has soared and states might be expected to consider repeal or rate 
reduction to lure or retain drilling within their boundaries, given increasing 
interstate competition to sustain and expand production.



14 raChel l. hampton anD Barry G. raBe

Nonetheless, the shale era does underscore some of the challenges to sus-
taining or expanding severance taxes, given the possibility that such a tax 
might discourage industry from seeking further production in the state that 
employs the tax (Harrison 2006). This has led to some speculation that drill-
ing firms might play one state against others in search of the lowest possible 
tax rates, along with the easiest paths to regulatory compliance, in making 
their location and investment decisions. Such arguments appeared, for exam-
ple, in the Alaskan debates over its severance taxes during the last decade. 
State political leaders, including Republican governor Sean Parnell, expressed 
concern that Alaska would be outcompeted by states, like North Dakota, if its 
tax remained high, particularly given the relatively high cost of launching and 
sustaining drilling operations in remote Alaska and then moving its products 
to market. This resulted in significant tax reductions in 2013, though these 
proved highly controversial and contributed to Parnell’s re- election defeat in 
2014. But in fact, there is little evidence that states have pursued less aggres-
sive taxes in the shale era (Rabe and Hampton 2015), and some studies suggest 
that arguments that reducing severance taxes will result in increased industry 
investment and production have little empirical foundation (Kunce 2003).

Severance taxes also threaten possible support to political officials from 
the oil and gas industry and their employees. States with a dominant energy- 
producing culture may compel politicians to curry favor with industry in 
search of possible campaign support or even employment after elected careers 
have ended or continue for part- time legislators. The questions of possible cap-
ture of state officials by local energy industries endure, albeit without much 
empirical evidence that this can block initial severance tax adoption, reverse 
such policies once created, or lead to significant statutory rate reductions over 
time. Instead, industry influence may be subtler, reflected in expanded state 
efforts to provide tax credits and economic development incentives or more 
flexible approaches to regulatory compliance. Overall, the political upside of 
severance taxes continues to outweigh the negatives, at least in the vast major-
ity of state cases to date.

Pennsylvania Exceptionalism

This overall pattern of high political feasibility for severance taxes makes 
the Pennsylvania case unique and worthy of extended consideration, given 
its unique standing among oil- a nd gas- producing states as averse to such 
taxes. Since the Drake Well was first drilled in Pennsylvania in 1859 (Wile 
2012; Yergin 2011), the state has been a major energy producer, including coal, 
oil, and natural gas, across many decades, with operations in many of the 



Leaving Money on the Table 15

state’s 67 counties. While the state has also long extracted natural gas, and 
has used horizontal drilling techniques since 2003, it generally assumed that 
it was phasing out fossil fuel production in the late 1990s and early 2000s and 
increasingly turned toward development of renewables through regulatory 
mandates and tax incentives (Rabe 2007). It was not until around 2009 that 
drilling activity accelerated markedly (U.S. Energy Information Administra-
tion 2016a, 2016b), allowing the state to tap into the bountiful Marcellus Shale.

Since that time, the landscape and economic geography of Pennsylvania 
have shifted considerably, given the advent of the shale era and Pennsylva-
nia’s emergence as the second-l argest natural gas– producing state, surpassed 
only by Texas. The number of producing gas wells in the state increased from 
57,346 in 2009 to over 70,000 in 2014, and total volume of natural gas pro-
duction soared during these years (see Table 3). The oil and gas industry in 
Pennsylvania also saw substantial growth in both employment and wages. 
Employment in the oil and gas industry went from 5,829 in 2007 to 20,943 
in 2012. The average annual pay in that same industry went from $60,870 in 

table 3. pennsylvania natural Gas Gross Withdrawals

year
natural Gas Gross Withdrawal  
(million Cubic Feet)

2000 150,000

2001 130,853

2002 157,800

2003 159,827

2004 197,217

2005 168,501

2006 175,950

2007 182,227

2008 198,295

2009 273,869 

2010 572,902

2011 1,310,592

2012 2,256,696

2013 3,258,042

2014 4,214,643

2015 4,768,848

Source: U.S. Energy Information Administration, Pennsylvania Natural Gas Gross Withdrawals, 2016, 
available at http://www.eia.gov/dnav/ng/hist/n9010pa2a.htm, accessed January 4, 2017.



16 raChel l. hampton anD Barry G. raBe

2007 to $82,974 in 2012 (U.S. Bureau of Labor Statistics 2014). Pittsburgh was 
increasingly declared as the hub of industrial leadership of this expanding 
industry and large industry- wide advocacy groups began to form in this shale 
play, such as the Marcellus Shale Coalition. Such regional organizations also 
included participation by Ohio and West Virginia firms, although Pennsylva-
nia continued to dominate this activity, particularly after New York imposed 
an extended moratorium on fracking in 2015 after years of temporary halts 
due to environmental opposition. Industry and state government officials 
have likened Pennsylvania to a burgeoning natural gas superpower, poten-
tially luring refineries and manufacturing firms eager to have proximity to 
abundant natural gas supplies.

The dramatic increase in production of natural gas in the state tied to 
hydraulic fracturing has entailed more gas production and jobs, but also 
increased environmental risks to air quality and groundwater. Addition-
ally, the state may face impacts from the use of diesel, forest disruption from 
pipeline construction, and methane leakage. A Penn State University study 
in 2016, for instance, found that the cost of environmental impacts would 
range from $162 to $755 thousand per well, although it ultimately concluded 
that the economic benefits to the state from drilling in the Marcellus Shale 
would exceed any known environmental impacts (Considine, Considine, and 
Watson 2016).

Amid all of this production and growth—and environmental impact—
however, the state has sustained its unique status as the only state that pro-
duces oil and gas but applies no severance tax to that extraction. This decision 
cannot be explained by any historic aversion to taxation, reflected in relatively 
high rates of sales and personal income taxes over an extended time. The state 
has shifted back and forth between various forms of Republican and Demo-
cratic Party control, although it routinely voted for Democratic presidential 
candidates between 1988 and 2012. It has not adopted any constitutional 
amendments, contrary to other states, to ban or restrict various forms of taxa-
tion and has generally ranked toward the middle of the pack among states 
according to their commitment to environmental protection (Rabe 2016b).

The uniqueness of the Pennsylvania system and its sustained opposition to 
a severance tax cannot be overemphasized. A quick comparison to the state’s 
shale neighbors who are both heavily involved in energy production—West 
Virginia and Ohio—bolsters this idea that Pennsylvania has truly deviated 
from the American state norm on this issue: West Virginia and Ohio both 
levy severance taxes. West Virginia overcame aggressive coal industry oppo-
sition to a severance tax in the 1950s and subsequently established such taxes 
for oil and natural gas; it has also most recently created a trust fund called the 



Leaving Money on the Table 17

West Virginia Fund, although it receives a far smaller portion of state tax pro-
ceeds than most other trust funds, including those in Alaska, North Dakota, 
and Texas (Rabe and Hampton 2016). Ohio adopted a Resource Severance 
Tax on oil, natural gas, salt, and a variety of minerals in 1972. Consequently, 
Pennsylvania presumably has political and economic space to adopt some 
version of a tax without triggering huge losses of development to neighboring 
jurisdictions. Nonetheless, it remains the exceptional American case through-
out the shale era. To understand this costly decision requires exploration into 
the political arena from which these decisions were made.

Severance Tax Aversion across Three Shale Era Governorships

Pennsylvania’s decision to refrain from a severance tax illustrates one state 
government option in the politics of economic development, whereby a state 
attempts to foster economic growth in a particular sector by either reducing 
or eliminating specific costs imposed on an industry through some form of 
taxation. The state has long struggled politically with boom- and- bust cycles 
that reflect its long- standing role as a major producer of fossil fuel energy 
alongside major development of manufacturing steel and other energy- 
intensive industries. During periods of decline in these areas, Pennsylvania 
has actively explored a wide range of development strategies that either would 
reverse these patterns of contractions or promote alternative forms of eco-
nomic development, as has been the case in many other states (Brace 1993; 
Eisinger 1989; Hansen 1989). This has occurred across multiple decades amid 
various patterns of partisan control of state government.

One cornerstone across these various Pennsylvania economic develop-
ment efforts has been attempting to promote as much fossil fuel development 
as possible by rejecting proposals to tax extraction. Some severance tax oppo-
nents contend that relatively high rates of corporate income and other taxes 
that cut across various industries may already impose significant tax burdens 
on energy- producing industries. This reflects a desire to use broader- based 
taxes in the state but also to use a nonseverance tax strategy to signal to the 
energy sector a strong desire to sustain legacy production as long as possible. 
This then pivoted toward a desire to sustain an antitax approach to promote 
expanded production once the shale era opened a possible path toward a 
return to national leadership in natural gas output and related use. In either 
instance, the absence of a severance tax has been seen as maximizing potential 
development of the resource.

However, the continuation of this policy during the past decade coincided 
with a growing partisan divide on the question of whether Pennsylvania 



18 raChel l. hampton anD Barry G. raBe

should join the ranks of all other gas- a nd oil-p roducing states and adopt a 
severance tax. Throughout the last decade, the governorships of Edward Ren-
dell (Democrat, 2003–2011), Tom Corbett (Republican, 2011–2015), and Tom 
Wolf (Democrat, 2015–2019) have featured high- decibel and near-c onstant 
state political debate over the severance tax question, usually reflecting major 
partisan divides between antitax Republicans and protax Democrats. This 
alignment varied somewhat, linked in part to whether or not drilling was 
occurring in a particular legislative district. But this was quite limited and 
leaves partisan affiliation as the best predictor of political response to numer-
ous proposals to adopt some form of a severance tax.

Divided Partisan Control in the Rendell Era
This section reviews the Pennsylvanian odyssey of debating but rejecting sev-
erance taxes during this period, beginning with the Rendell era. First elected 
in 2003, Rendell was the first Pennsylvania governor to see the reemergence 
of a surge in shale gas production in the state. Rendell supported drilling but 
also endorsed a severance tax. He embraced legislation that would create a 5% 
tax on the extraction of natural gas and oil, though most Pennsylvania fossil 
fuel production involved only the former. This proposal was generally sup-
ported by Democrats in the legislature while it was strongly opposed by most 
Republicans. The GOP retained control of the Senate throughout Rendell’s 
entire governorship, a pattern that continued through the Corbett and Wolf 
administrations. In turn, the House was held by Republicans in 2005–2006 
and then later between 2011 and 2016.

The highly partisan divide over a severance tax proposal was also linked 
to controversy over how to develop a regulatory system to oversee this new 
and expanding form of energy extraction (Rabe and Borick 2013). Rendell 
argued that other states had successfully adopted and maintained such a tax 
without harming production and that such a tax in Pennsylvania could help 
diversify the state’s base of resources, which had been severely strained by 
the Great Recession. But by 2010, the governor pronounced the severance tax 
plan dead after protracted legislative debate. “It is irresponsible for Senate and 
House Republicans to refuse to compromise and simply turn their backs on 
these negotiations after days and weeks and months of work,” he said. “Their 
clear unwillingness to change their previous proposal or to resolve differences 
with the House Democrats and with my administration makes it obvious that 
they have killed the severance tax in this legislative session” (Swift 2010). In 
response, Republican officials countered that any tax adopted during the for-
mative period of shale development and expansion could drive energy extrac-
tion investment to other jurisdictions, particularly given the expanding set of 



Leaving Money on the Table 19

drilling options as shale supply discoveries continued to expand around the 
nation and beyond. Some Republicans opposed a tax under any circumstances 
whereas others argued that it should be tabled during this period of rapid 
expansion but possibly be revisited in the future after development matured.

Unified Republican Control in the Corbett Era  
and the Emergence of the Impact Fee
Term- limited Rendell did not get the chance to further pursue his severance 
tax vision; Republican Tom Corbett was elected as his successor in 2010, with 
unified Republican control of the governorship and both legislative chambers 
during his single term. Having aligned himself heavily with the gas indus-
try during his election and in earlier stages of his political career as attorney 
general, including substantial campaign donations, Corbett pushed aggres-
sively for shale gas development as a centerpiece of a way to transform the 
Pennsylvania economy. In his first budget message as governor, in 2011, he 
said: “Let’s make Pennsylvania the hub of this (drilling) boom. Just as the oil 
companies decided to headquarter in one of a dozen states with oil, let’s make 
Pennsylvania the Texas of the natural gas boom. I’m determined that Pennsyl-
vania not lose this moment. We have the chance to get it right the first time, 
the chance to grow our way out of hard days” (Bauers 2011). Corbett made 
no bones about his view that severance tax adoption was “un- American” and 
could destroy any prospect of Pennsylvania realizing its potential as a natural 
gas powerhouse (Rabe and Borick 2013, 329).

Corbett’s plan to transform Pennsylvania into a natural gas superpower 
involved a multipart strategy that emerged in part from an advisory com-
mission he convened early in his governorship. This would ultimately lead 
to legislation known as the Unconventional Gas Well Impact Fee Act (or Act 
13), signed into law by Corbett in February 2012 after legislative votes that 
fell largely along partisan lines. The legislation would represent one of the 
first efforts by any state to address numerous aspects of shale governance 
through one comprehensive statute, as many states had been relying primar-
ily on earlier regulatory and tax policies applied to conventional drilling or 
piecemeal reforms of earlier policies (Rabe and Borick 2013). It included many 
new regulatory provisions, although it received national attention primarily 
for two reasons.

First, it formally expanded state government authority over numerous 
aspects of hydraulic fracturing, including many types of land-u se decisions 
that might otherwise fall under local government control. This included such 
issues as restricting well site operating hours, limiting noise around drill-
ing operations, and establishing conditions for screening and fencing around 



20 raChel l. hampton anD Barry G. raBe

sites, even in cases where drilling took place near residential areas or small 
businesses. Pennsylvania had a long- standing tradition of substantial state 
deference to local authorities in most areas of zoning and land-u se planning, 
including many issues linked to expansion of drilling. But Act 13 formally 
shifted that control to state authorities, with various responsibilities allocated 
to the Pennsylvania Department of Environmental Protection and related 
state agencies that generally did not regulate local land use. This represented 
a form of preemption designed to limit local resistance to expanded drilling, 
an issue that has also emerged in many other states where local and state 
views have clashed (Rice 2016). This was intended to make it as straightfor-
ward as possible for gas extraction proposals to secure needed permits and 
approvals to move ahead with new drilling operations. Act 13 would, how-
ever, ultimately produce prolonged litigation that led to a historic reversal 
in a 2013 State Supreme Court case, Robinson Township v. Commonwealth 
of Pennsylvania (52 A.3d 463 [Pa. Cmwlth. 2012]), that would produce much 
subsequent uncertainty about the boundary of state and local roles that con-
tinued through 2016.

Second, Corbett attempted to honor his no- severance tax pledge that had 
been a core part of his campaign with an alternative mechanism of an impact 
fee. This would represent the imposition of some annual costs on each drilling 
site during the early years of operation, set as a fixed annual fee rather than 
as a percentage of gross value of produced natural gas. It would decline over 
time despite the productivity of the well and all revenue would be allocated 
through a formula to various state agencies and local governments where 
drilling would occur. The animating principle was that this was not a tax 
but rather a fee to help governments mitigate some of the “impacts” of shale 
development. A further political attraction was that this fee was likely to be 
set at a very low level when translated into a percentage of produced natural 
gas value. It thereby set a de facto rate that was far lower than most state sever-
ance taxes at its peak and would both decline and then disappear entirely over 
time, unlike all existing state severance taxes that remained in force over the 
full lifetime of production.

The impact fee plan also used revenue allocation as a way to build local 
government support for the fee, potentially serving to create a loyal political 
constituency that might then oppose any future severance tax. Most severance 
taxes allocate revenues on a statewide basis rather than concentrate them on 
jurisdictions where drilling occurred. In the case of the impact fee, the only 
Pennsylvania counties, municipalities, and townships that were eligible for 
any potential revenue were those that hosted drilling operations. The portions 
of impact fee revenue that would be returned to localities would be allocated 



Leaving Money on the Table 21

on the basis of energy production. Local governments were able to use impact 
fee funds on a wide range of programs, including road repair and emergency 
services that were in some way linked to drilling (Weber and Harleman 2016).

Local governments, however, would have to make the political decision to 
actually authorize such a fee rather than the state, with the legislation simply 
giving them this option and avoiding any direct state responsibility for the 
levy. Therefore, proponents framed this as lacking state political fingerprints, 
with the fee approval decision made locally. If localities went forward with 
the impact fee, the state would then collect the revenue but make local allo-
cation contingent on full local compliance with state regulatory provisions, 
including restraint from any local efforts to add regulatory burdens linked 
to drilling that violated Act 13’s state preemption provisions. This clause was 
applied almost immediately, with seven local jurisdictions in 2012 failing to 
receive any impact fee revenue due to state interpretation of some form of 
noncompliance. These jurisdictions alleged heavy-h anded state government 
oversight, but they had no recourse despite having levied the impact fee within 
their boundaries.

The impact fee adoption did not quash subsequent debate over severance 
taxation. The fee did sustain Republican support in general, albeit with excep-
tions in some cases where GOP legislators represented districts without shale 
activity and thereby received relatively little revenue related to drilling in the 
state. It did little to deter Democratic support for a tax, most intensively in 
areas of the southeastern and south-central portions of Pennsylvania that 
lacked shale and received limited revenue transfer from the fee to localities. 
Nonetheless, there was never a serious effort to put a severance tax onto the 
legislative agenda for the balance of Corbett’s term in office. This reflected 
unified Republican political control of state government and the argument 
of party leadership that a nontax fee was more than sufficient to cover any 
adverse impacts of natural gas drilling in the state while being sufficiently 
modest to give Pennsylvania energy producers a financial edge versus alterna-
tive state drilling venues.

Return to Divided Control in the Wolf Era
Corbett made Act 13 and his staunch support for expanded natural gas 
extraction a cornerstone of his 2014 reelection bid. All of the prominent can-
didates for the Democratic nomination endorsed some form of a severance 
tax, including eventual nominee Tom Wolf, who promised if elected to sup-
port a severance tax that he said could raise up to $1 billion annually (Cocklin 
2014a, 2014b, 2015). The severance tax issue figured prominently in campaign 
advertising and candidate debates. In one exchange, Corbett emphasized that 



22 raChel l. hampton anD Barry G. raBe

the impact fee was already bringing in revenue to state and local governments 
and that higher taxes would deter future energy investment. Wolf argued that 
“We have a God- given resource lying beneath our feet; we need to do every-
thing in our power to make sure this benefits Pennsylvania. My severance tax 
is not meant to kill the goose that’s laying the golden egg. I’m just saying, let’s 
share some of that gold with the people of Pennsylvania.” (Bravender 2014). 
Wolf won a decisive victory over Corbett by a 55% to 45% margin, which 
seemed likely to propel pursuit of severance tax adoption. However, Wolf had 
no measurable electoral coattails as both chambers of the legislature remained 
in Republican hands and the GOP increased its overall margin in the Senate.

During his first two years in office, Wolf repeatedly championed various 
versions of a severance tax to replace the impact fee, with significant varia-
tions in rates that began at 5% on the value of gas at its wellhead in 2015 but 
increased to 6.5% the following year. This higher rate would have surpassed 
that of any state east of the Mississippi River, though it would have remained 
below many states to the west of that divide. In 2016, Wolf also added a pro-
posed supplement of a volumetric fee that would have also included a 4.7 cent 
surcharge for every thousand cubic feet and, in effect, assured higher rates 
when gas prices declined. This suggested some efforts to emulate the tax 
and fee combination that had long been in place in neighboring West Vir-
ginia, with considerable industry opposition despite its political durability. 
Wolf demonstrated willingness to adjust the technical terms of the proposal, 
including rates and the related fee, and generally retained solid but not unani-
mous support from Democratic legislators. He generally favored allocating 
revenues for education and local governments rather than any longer- term 
investments through a trust fund. But despite his various adjustments, Wolf 
gained virtually no traction among Republicans in either the House or Sen-
ate, reflecting their steadfast opposition to any extraction tax (Woodall 2016).

This has resulted in protracted partisan battles, with the lack of agreement 
on the severance tax leading to an extended failure to adopt a state budget. 
Pennsylvania had considerable precedent for late budget completion but the 
2015–2016 delays were unusually long, ultimately lasting for nearly one year. 
These battles included aggressive use of vetoes by Wolf that prevented any 
spending for certain state government programs, with the severance tax con-
troversy a primary point of contention. Wolf would ultimately back down and 
withdraw the tax proposal in order to secure a 2016 budget accord but vowed 
to return to this issue in future sessions. The state also faced extended parti-
san divides over a range of new environmental regulations on drilling opera-
tions established by the Wolf Administration through interpretation of Act 
13 and related statutes by the state Department of Environmental Protection. 



Leaving Money on the Table 23

Opponents argued that any new severance tax would only compound the 
added costs imposed by these new regulations.

Severance tax opponents in the Wolf era were particularly emphatic that 
such a tax could be considered only if natural gas prices eventually rebounded 
after a period of significant decline during the mid- 2010s. As in prior peri-
ods, some opponents suggested that a tax would never be acceptable whereas 
others held out the possibility of some reconsideration in the future. Divides 
were also evident over the extent to which Pennsylvania should rely on natu-
ral gas extraction and related development as a fundamental path for future 
economic growth or should it pursue economic diversification instead. Some 
Republicans were adamant that prices would bounce back and that the state 
could also lure substantial new manufacturing through tax credits and sub-
sidies linked to new investment that made significant use of natural gas har-
vested in the Keystone State. One such proposal advanced by Republican 
House Speaker Michael Turzai, the Keystone Energy Enhancement Act, called 
for creation of Keystone Energy Zones that would offer highly favorable terms 
for such investment and arguably transform Pennsylvania along the lines of 
more energy-i ntensive states such as Texas.

Opponents also contended that Pennsylvania would lose its competitive 
edge to neighboring Ohio and West Virginia in the Marcellus and Utica shale 
plays if it followed their precedents and established a severance tax. Marcel-
lus Shale Coalition president David Spigelmyer routinely noted in 2015 and 
2016 that any severance tax adoption by Pennsylvania would trigger a major 
outmigration of drilling operations to other states, even though they all had 
some form of severance tax in place. In a representative comment, he observed 
in 2015 that a state severance tax would make the state “uncompetitive with 
Ohio, Texas, and Louisiana—China. Capital can move like water in Penn-
sylvania. It can move from Pennsylvania pretty quickly” (Cusick 2015). In 
particular, he anticipated movement to the immediate west of the state if a tax 
was adopted, noting that “You can line up at the border and watch rigs move 
into Ohio” (Lee 2015).

Both West Virginia and Ohio faced severance tax controversies of their 
own during this period, although neither adopted any changes in established 
taxes through the end of 2016. In West Virginia, Democratic governor Earl 
Ray Tomblin in 2016 lamented plunging severance tax revenues from gas, oil 
and the state’s iconic fossil fuel of coal and endorsed the idea of some reduc-
tion in these taxes in hopes that it might trigger a rebound for extraction. The 
State Senate supported a bill to eliminate a volumetric fee similar to the one 
Wolf proposed for Pennsylvania that complements the severance tax. It also 
supported a reduction in its 5% severance tax on oil, natural gas, and coal 



24 raChel l. hampton anD Barry G. raBe

production to 3% over a two- year period. Both of these failed to gain support 
in the lower House of Delegates, though this issue reemerged during the 2016 
election and figured to resurface in subsequent years.

In Ohio, Republican governor John Kasich argued that Ohio’s severance 
tax, which charges a fixed amount per unit of energy produced regardless of 
price (20 cents per barrel of oil and three cents per 1,000 square feet of natural 
gas) and generally ranks among the lowest in the nation, represented a state 
failure to capture revenue that should be linked to the permanent removal of 
a natural resource. Much like Wolf, Kasich repeatedly advanced bills with a 
variation of higher rates between 2011 and 2016, ranging from 1.5% to 6.5%. 
He proposed that most of the revenue could be used to reduce other taxes, 
including rates for state personal income taxes. Kasich faced significant but 
not unanimous opposition from members of his own party in the legislature 
and a Pennsylvania- like standoff ensued for several years without resolution, 
although it did not go so far as to delay budget agreements. In a comment 
representative of his views, Kasich said in 2015 that the current tax system is 
a “total and complete rip- off to the people of this state” (Krebs 2015). In 2016, 
he vowed frequently to continue his campaign to increase the severance tax 
and use revenues to provide personal income tax relief.

Consequently, Pennsylvania remained unique in refraining from sev-
erance tax adoption but found itself by 2017 nestled in a shale play where 
neighboring states continued to debate property tax rates and structure dur-
ing an energy price decline. The question of severance tax adoption remained 
prominent on Pennsylvania’s political agenda as Wolf entered the second half 
of his term in 2017; any further political standoff on this issue would likely 
only keep it prominent in subsequent election cycles. As a result, Pennsylvania 
and its immediate neighbors posed an important national test of the future 
political prospects for severance taxes.

Consequences of Pennsylvania Exceptionalism  
and Future Considerations

Much like other energy- producing states, Pennsylvania has not been immune 
from boom- and- bust economic cycles either historically or in the shorter time 
horizon of the shale era. It continues to face questions about the impact of 
natural gas development on its economy and environment in both the near-  
and longer- term, with strong parallels to other states and nations that operate 
energy- centered economies. But Pennsylvania’s unique stance on severance 
taxes creates a number of important considerations for the state, both in the 
near term and in coming decades, as it further explores development of its 
natural gas supplies.



Leaving Money on the Table 25

General Revenue Foregone
First, the lack of a severance tax is costly to the state of Pennsylvania in terms 
of lost potential revenue and the need to use other taxes to cover its budgetary 
outlays. Thus far, the impact fee has generated slightly more than one billion 
dollars for the state during its first five years of operation, with approximately 
40% retained by the state and the remainder allocated to county and local 
governments. Wolf has projected, however, that a 6.5% severance tax would 
generate $350.9 million in revenue for the 2016/2017 fiscal year, leading up to 
$507 million for the general fund by the 2020/2021 fiscal year (Phillips 2016). 
The Pennsylvania Budget and Policy Center had much higher estimates in 
2013, however, reflecting that revenue projections have declined as natural gas 
prices have dropped markedly (Pennsylvania Budget and Policy Center 2013). 
There are no reliable published estimates of whether Pennsylvania secures 
added drilling and related economic stimulus due to its nontax approach.

As in the case of state severance tax revenues, Pennsylvania impact fee 
revenues have declined in recent years. Revenues peaked at $226 million in 
fiscal year 2013, slipped to $188 million for fiscal year 2015, and were pro-
jected to drop to an estimated $129 million to $171 million for fiscal year 2016. 
In addition to the fact that total revenues are considerably lower than most 
other severance tax states, despite the state’s massive natural gas production 
(see Table 2), impact fee revenue is most abundant in years immediately after 
drilling begins rather than over the entire production life of each well when 
the fee is phased out and then eliminated even if drilling continues. So it is 
susceptible to significant f luctuations as the sheer amount of new drilling 
moves up and down, as it has in recent years. As a result, revenue production 
will decline markedly over time despite overall output unless there is a con-
stant pace of new drilling (Environmental Law Institute and Washington and 
Jefferson College Center for Energy Policy and Management 2014).

This consequence is especially considerable in light of Pennsylvania’s 
ongoing budget crisis. Other major energy- producing states with a sever-
ance tax, such as Alaska and North Dakota, have also struggled with major 
deficits, given oil price busts, although these reflect both declining severance 
tax revenues and the decision to suppress other taxes, given severance tax 
dependence. In turn, other states that have considerable energy production 
and a severance tax, such as Texas and California, have had less significant 
budget problems, given their more diversified statewide economies and tax 
bases (Saha and Muro 2016). As of 2017, there were no long- term fixes in 
sight for the Pennsylvania budget after a patchwork of increases in tobacco 
taxes, partial privatization of liquor sales, a one- time tax amnesty program, a 
loan from a medical malpractice insurance fund, and anticipated expansion 



26 raChel l. hampton anD Barry G. raBe

of gambling and related taxes were used to attempt to close an immediate 
budget gap.

Earmarked Revenue Foregone
Just as Pennsylvania is missing out on the opportunity to collect substantial 
revenues, it is also foregoing opportunities to use them to address negative 
consequences from drilling or prepare for longer- term challenges. In Colo-
rado and North Dakota, considerable amounts of severance tax revenue are 
placed in special funds for related programs such as land reclamation, water 
conservation, and alternative energy development (Rabe and Hampton 2015). 
As Pennsylvania Budget and Policy Center officials stated in 2010, “Legislative 
inaction has left the environment unprotected in the Marcellus Shale region of 
the state. It has passed the local costs of increased drilling on to state and local 
taxpayers” (Swift 2010). The absence of a severance tax also precludes the pos-
sibility of setting aside some portion of oil-  and gas- production revenues for 
long- term uses through the creation of a trust fund. In North Dakota, 30% of 
annual severance tax revenues are deposited in a state Legacy Fund for invest-
ment and gradual allocation once state oil resources have been depleted; other 
states have continued to experiment with their own versions of this approach 
(Rabe and Hampton 2016).

The Resiliency of Severance Taxation as a Pennsylvania Agenda Issue
The sustained rejection of severance tax proposals over the last decade dem-
onstrates the steep political hurdles to adoption. But it also indicates a kind 
of resilience for this issue, with an enduring base of political support that is 
unlikely to disappear. Alongside the view that Pennsylvania should refrain 
from severance taxation and use this unique feature to try to expand extrac-
tion and related development is a continuing counterargument that the state 
should attempt to extract some lasting revenue value from the permanent loss 
of its fossil fuel- based natural resources. This reflects in part a long Penn-
sylvania history with the aftermath of energy- production booms, including 
long- term environmental damage linked to extensive coal mining operations 
that remain a challenge in many parts of the state and a desire to mitigate any 
potential risks with supplemental revenue.

This debate is unlikely to disappear at any point in the near future and 
would likely continue even if Pennsylvania adopted some form of a tax. 
Indeed, public opinion analysis suggests a significant base of public support 
for some form of a severance tax in the state, a remarkable finding, given the 
ongoing state political opposition to such a tax and the general lack of public 



Leaving Money on the Table 27

enthusiasm for new taxes. Between February 2014 and February 2016, the 
Muhlenberg Institute of Public Opinion conducted four surveys of Pennsyl-
vania residents and found consistently that 62% to 63% of respondents favored 
the adoption of a severance tax with 25% to 29% opposed and the remainder 
not sure (see Table 4). These surveys also found that respondents were far 
more likely to say that such a tax would not encourage drilling firms to leave 
the state, including a 48% to 36% margin in February 2016 (see Table 5). This 
is consistent with earlier survey findings from Muhlenberg on this issue, sug-
gesting a sustained majority of support across the last two governorships and 
periods of both surging and declining natural gas prices (Brown et al. 2013).

table 5. pennsylvania muhlenberg institute of public opinion survey results,  
Firm Drilling Questions

Q: Please tell me if you strongly agree, somewhat agree, somewhat disagree or strongly 
disagree: Increasing taxes on natural gas drillers in Pennsylvania will lead drilling firms 
to leave and so should be avoided

year
strongly 
agree

somewhat 
agree

somewhat 
Disagree

strongly 
Disagree not sure

2011 11% 22% 23% 28% 16%

2012 16% 16% 30% 34%  4%

2015 18% 20% 26% 29%  8%

2016 21% 15% 23% 25% 25%

Source: Muhlenberg College Institute of Public Opinion, Fracking Related Questions, Summary 
2011–2016 (on file with the authors).

table 4. pennsylvania muhlenberg institute of public opinion survey results, 
severance tax Question

Q: Many states have created “severance taxes” in which drillers pay a tax that is 
based on the value of natural gas and oil that they extract from below the ground. 
Pennsylvania does not currently have such a tax. Do you think that Pennsylvania 
should adopt such a tax or not?

year should adopt should not adopt not sure/refused

February 2014 62% 29%  9%

February 2015 63% 25% 13%

October 2015 63% 28%  9%

February 2016 62% 28% 10%

Source: Muhlenberg College Institute of Public Opinion, Fracking Related Questions, Summary 
2011–2016 (on file with the authors).



28 raChel l. hampton anD Barry G. raBe

Future Severance Tax Prospects

A prolonged pattern of suppressed prices for natural gas does not necessarily 
mean reduced production, given the continued industry success of refining 
extraction technologies and practices that reduce the sales price necessary to 
allow them to generate a profit. Indeed, Pennsylvania natural gas production 
set a record in 2015, reflecting continued growth in output despite sustained 
price reductions (Cocklin 2016b). In turn, possible expansion of natural gas 
exports, including liquefaction and transport to other continents, converges 
with growing domestic demand for the fuel as an alternative to coal and sug-
gests that the national appetite for natural gas is not going to disappear at any 
discernible future point. Moreover, there does not appear to be any political 
constituency in the state capable of securing a political majority through a 
campaign to halt or place a New York- like moratorium on drilling and “leave 
natural gas in the ground.”

Consequently, fracking will in all likelihood continue in Pennsylvania 
alongside ongoing debate over regulatory policy and severance taxes. Other 
issues such as the fairness of royalty payments to land owners and the levels 
of bonds that drillers are required to post have also remained contentious in 
recent years, including protracted litigation against some of the major gas- 
producing firms (Cocklin 2016a). There has also been periodic discussion in 
the legislature and among local governments to allow localities to impose 
property taxes on pipelines that run through their jurisdictions, as is allowed 
in numerous other states. However, the severance tax question remains a cen-
tral point of contention not just in Pennsylvania energy policy circles but in 
state politics more broadly. In all other gas- a nd oil- producing states, the sev-
erance tax issue has long since been resolved, leading to taxes that have proven 
durable for decades and generations in most state cases. In those settings, the 
discussion of severance taxes links to issues of rates and revenue use. Only 
in Pennsylvania does the very question of severance tax adoption remain an 
open and contentious one.

NOTES

1. California, a top producer of crude oil, also has an unusually low severance tax rate. 
The state levies what is called an oil-  and gas- production assessment that is set each year by 
the California Department of Conservation, imposed on each barrel of oil and each 10,000 
cubic feet of natural gas produced in the state (California Department of Conservation 
2016). Individual counties rather than state authorities, however, are responsible for col-
lecting the ad valorem taxes. California might be the state most similar to Pennsylvania in 
its failure to create a statewide severance tax amid considerable controversy over drilling 
and simultaneous pursuit of a cap-a nd- trade system to reduce carbon emissions (Rabe 
2017). In fact, severance tax debates have also simmered in California since the 1990s, 



Leaving Money on the Table 29

including the most recent major effort to create an oil extraction tax that took place in 
2014, with a proposal to allocate revenue for higher education. This generated a consider-
able constituency among University of California students but ultimately was not adopted 
(Smith and Kovitz 2014).

2. For an application of this approach in the case of carbon pricing, see Rabe 2016a.

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rachel l. hampton is a third-year law student at the University of Michigan Law 
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32 raChel l. hampton anD Barry G. raBe

Barry G. rabe, PhD, is the J. Ira and Nicki Harris Family Professor of Public Policy at the 
Gerald R. Ford School of Public Policy at the University of Michigan. He is also a Fellow 
of the National Academy of Public Administration and a Non-resident Senior Fellow at 
the Brookings Institution. Rabe examines policy at the intersection of energy development 
and environmental protection in federal systems and has done extensive work on federal 
and state climate policy implementation. He is currently completing a book on the politics 
of carbon pricing and is a member of the American Academy of Arts and Sciences project 
on energy policy durability, focused particularly on the Clean Air Act. This article is one 
of a series of publications co-authored with Rachel L. Hampton on the political economy 
of energy severance taxes and revenue use.


	Structure Bookmarks
	Severance Taxes
	Pennsylvania Exceptionalism
	Future Severance Tax Prospects
	NOTES
	REFERENCES




