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Marcellus Shale

State Announces Impact Fee Collections for 2013

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The state has tallied the amount of money coming in for the second year of the Marcellus Shale Impact Fee.  The number is not as high as the first year.

The state has collected 198 million dollars through the impact fee this year, about 6 million less than last year due mainly to the lower price of natural gas.

Payments for some wells are still being challenged by those producers. Any additional payments received from the disputed wells will be updated on the PUC’s website.

Governor Tom Corbett says the fee has now brought in more than 400 million dollars since it was enacted. He says Act 13, which implemented the fee, has played a key part in making sure that the industry grows safely and responsibly.

Checks Going Out Soon as Impact Fee Collects Over 200 Million

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The state’s impact fee on Marcellus shale drillers has brought in more than 204 million dollars in its first year. The money has been divided up and checks will head out soon.

Nearly 15 hundred municipalities and 35 counties are sharing more than 100 million dollars from the impact fee. Those checks range from a low of $1.44that will be going to a borough in Allegheny County, to $500,000 each for 26 municipalities with more drilling activity. The impact fee law restricts how the money can be spent.

Another 72 million will be shared among all 67 counties through the Marcellus Legacy Fund.  Just over 25 million will help pay for oversight of the industry.  

Governor Tom Corbett says Act 13, in addition to imposing the impact fee, also enacted a new range of environmental and safety standards.  He says the fee will help cover the enforcement of those standards.

He says when the state was confronted with the challenges and opportunities of this emerging industry, the goal was to get things right.  He believes the total of $204 million dollars is a clear sign that they did.

Marcellus Shale

Impact Fee Raises More than First Estimated

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Most well drillers in the Marcellus Shale region have met the September 1st deadline for Pennsylvania’s new natural gas impact fee. The Pennsylvania Public Utility Commission has collected almost 198 million dollars from drillers, and estimates the final number will be closer to 206 million when remaining fees have been paid.

PUC Spokeswoman Jennifer Kocher says about 4% of drillers have not paid.  Most are smaller operations and some are disputing whether their production levels meet the threshold for the fee.  The final resolution of those disputes could affect the final amount collected.

The PUC hopes some drillers who have not paid may not have been fully aware of the deadlines for the new fee.  The commission is in the process of reminding them that the fee is due.

The legislature had projected 180 million in the first year of the fee.  60% of the money will be split among counties and municipalities hosting gas wells; the rest will be divided among state agencies that deal with drilling impacts.

Of the nearly 45-hundred wells that were affected by the impact fee, about 419 were vertical  and the rest horizontally drilled and subject to a higher fee.

Marcellus Shale

PUC Moves Forward with Impact Fee Provisions, Minus Zoning Issues

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The Pennsylvania Public Utility Commission has finalized provisions of Act 13, related only to the collection and distribution of the impact fee for natural gas wells.    The commission has put the zoning portion on hold, due to pending litigation. Spokeswoman Jennifer Kocher says the final implementation order contains various deadlines, including the reports due from natural gas producers.  The fees must be paid to the PUC by September 1st.

The order also includes forms that municipalities will need to collect their share of the fee. Municipalities will have to submit a 2010 budget report, because some of the money that will be disbursed is based on that information.  Kocher says all 37 eligible counties have authorized collection of the fee.

Money will be distributed to eligible counties and municipalities by December 1st.

The PUC did take the next step toward hiring outside legal counsel to provide advice on zoning issues related to Act 13, but no contract has been approved yet.

Seven municipalities are part of a group suing the state, claiming the new law is unconstitutional, in that it takes the power to control property away from towns and landowners  in favor of the oil and gas industry. The  lawsuit was filed in Commonwealth Court in March. A judge issued an injunction in April blocking implmentation of the zoning portion of the law.  The case is expected to be heard next month.

PUC Puts Impact Fee Final Implementation Order on Hold

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A Commonwealth Court judge’s injunction in a lawsuit challenging a portion of the impact fee law has prompted the state Public Utility Commission to delay action on a final implementation order.   

The PUC is seeking clarification from the court before moving forward with the final implementation order for the impact fee law.  The injunction deals with the zoning portion of the law, but the PUC also has a role in that area. PUC spokeswoman Jennifer Kocher says they do not anticipate that the collection and disbursement of the fee will be delayed by the Commission’s decision to await a clarification. She says work is still continuing on the implementation of the act.

Kocher says the commission’s next scheduled public meeting is May 10th, but she could not say whether or not the order would appear on that agenda.

The Commission has jurisdiction in both the zoning and fee collection portions of the law.  Kocher says the PUC needs clarification on how the injunction impacts its role in reviewing local ordinances on oil and gas operations.   She says they hope to move other portions under their jurisdiction forward sooner, but they wanted to put everything on hold at this time to await that clarification. She says they felt there were some ambiguities in the court’s order.

PUC Ready to Implement its Responsibilities Under Act 13- The Impact fee Law

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The state Public Utility Commission plays an important role in the new natural gas impact fee law.   Chairman Robert Powelson told the house appropriations committee the commission is ideally positioned to take on these new responsibilities outline in Act 13.

It’s up to counties to decide whether to impose the fee, but the PUC will oversee collection and distribution of it, and weigh in on whether local drilling ordinances are reasonable. Powelson says they put together an internal team to look at implementation before the bill even passed.

Powelson says the implementation team already has a draft work plan. Last week, the PUC issued a secretarial letter to all of the affected parties.  In the coming weeks, the commission will issue a tentative implementation order addressing some of the procedures related to their new duties under the act.

The commission has posted several new positions related to the act; two attorneys, two new budget analysts and one MIS developer.

There is a 60 day window for counties to decide whether to impose the fee. Municipalities in counties that do not assess the fee have 60 days after that period to petition to have the fee imposed. On September 1st, the natural gas producers will report their well information and the commission will provide an assessment vehicle on the spud fee.   Spud refers to the point at which drilling of a natural gas well actually begins.

Powelson says December 1st is the date checks need to go out to counties and municipalities and that deadline is very important to the commission.  They are looking at outsourcing the collection and distribution of the fee initially.

Final Marcellus Shale Legislation Headed to Gov’s Desk

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Even after years of debate, opinions are mixed on the so-called compromise bill that emerged from a conference committee this week.  The Senate voted 31 – 19 on Tuesday, and the House followed suit with a 101 – 90 vote on Wednesday. 

The legislation will allow counties to authorize a per-well impact fee (between $40,000 – $60,000 in year one) that will generate needed revenue, according to County Commissioners Association of Pennsylvania government relations manager Lisa Schaefer.  “We’ve been talking for quite some time about the broad nature of the impacts that are facing our local communities from Marcellus Shale Drilling,” Schaefer tells us.  “Without a direct revenue stream coming back to help offset that, the impact’s been falling back on our local taxpayers.” 

The most obvious local impact from Marcellus Shale is the wear and tear on roads and bridges, but the behind-the-scenes effects include greater demand for county services.  60% of an imposed impact fee would stay local; the other 40% would be used for a variety of statewide environmental programs, like hazardous site cleanup or flood control. 

Should a county decide not to impose a fee, its municipalities would still have the chance to band together and force their hand under the law. 

The bill would also impose stricter new drilling standards and environmental safeguards, but PennFuture President & CEO Jan Jarrett says there are too many waivers and exceptions.  “What we need in Pennsylvania are world class drilling standards, and these regulations that are contained in HB 1950 are woefully short of that goal,” Jarrett explained in a telephone interview. 

The issue of local zoning was hotly debated on the House floor, as critics balked at standardized rules that would require local governments to allow drilling in all zones – including residential.  But State Rep. Garth Everett argued that you’re not going to see a well pad in the middle of a neighborhood.  “All that we’re requiring in this legislation is that this industry be regulating just like any other industry with respect to zoning.”    He says it’s an industrial use that will be zoned like an industrial use. 

Governor Tom Corbett released a statement Wednesday afternoon that said he looks forward to signing the measure into law.  “This legislation reaffirms our strong commitment to safe and responsible natural has development here in Pennsylvania.”  He says it contains 24 of the legislative recommendations made by his Marcellus Shale Advisory Commission.

Marcellus Shale

Shale Bill Passes State Senate

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A Marcellus Shale bill has cleared the State Senate. The vote and debate held up the Governor’s budget address on Tuesday morning.  The chamber approved the conference committee report on HB 1950 by a vote of 31 to 19.   

The bill would allow   counties to impose a fee on natural gas drillers.  60% of the money raised would go to local governments; the rest would be allocated for a variety of statewide initiatives. The bill also expands environmental regulations on the natural gas industry.

Senator John Wozniak (D-Cambria) voted in favor of it, saying it has taken them 3 years to get this far.  He said no matter what tax or impact fee they would place on this natural gas, it’s not the panacea that’s going to balance the budget.  He points out that West Virginia, because of competition, recently reduced its severance tax.

Senator John Blake (D-Lackawanna) opposed the Marcellus Shale plan, saying it sells Pennsylvania short.  He said at the same time we’re slashing public educating and hurting individuals who depend on our social services safety net, we’re forgoing revenue.  He says it’s but a fragment of what Pennsylvanians deserve.

Senator Mike Stack (D-Phila) said hard working Pennsylvanians lose out in the deal.  He said they had the opportunity to help the entire state, to close the budget deficit, to help kids go to school, to repair roads, but instead, “gas companies win.”

Missed Opportunities on Marcellus Shale?

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Severance tax advocates say legislative inaction is adding up to millions of dollars in lost revenue.  In fact, the Pennsylvania Budget & Policy Center’s “Drilling Tax Ticker” crossed the $300-million dollar mark late last month.  That’s money that Research Director Mike Wood says could be put to good use.  “We’ve been making lots of cuts to teachers in our schools, domestic violence shelters have had to close their doors to new people.  This is definitely something that could have helped in a time when revenue is pretty hard to come by.” 

The ticker is based on an effective tax rate of roughly 6%, whereas the impact fee proposal being hammered out by GOP negotiators in Harrisburg would more likely be in the one or two percent range.  “Most states that have either oil or gas have a severance tax.  The major producing states all have such a tax,” Wood tells Radio PA.  “Pennsylvania is the only one that doesn’t.”   

Marcellus Shale

A Revenue Department analysis, last year, found that natural gas companies had paid more than a billion dollars in taxes since 2006. However, Mike Wood questions that figure because it includes taxes not directly related to drilling activity.

Governor Tom Corbett isn’t fazed when critics point out that Pennsylvania is the largest gas-producing state without a severance tax.  He uses the Texas analogy.  “They pay a severance tax in Texas, yes they do, but their corporate income tax is considerably lower.  So we have to compare apples to apples, not apples to pears.”

While Pennsylvania may not have a severance tax, the governor says they are paying corporate and related taxes.  “They’ve paid billions of dollars in taxes, so far, in Pennsylvania directly,” Corbett said on a recent edition of Ask the Governor.  “But keep in mind all of their employees, all the companies they purchase goods and services from, they’re all paying taxes also.” 

Both Corbett and Senate President Pro Tem Joe Scarnati (R-Jefferson) have expressed a desire to finalize impact fee discussions before next week’s budget address.

Marcellus Shale Protesters

Will Lawmakers Reach Marcellus Shale Compromise in 2012?

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The House and Senate each passed their own versions of Marcellus Shale impact legislation prior to the holiday break.  But Governor Tom Corbett says staff-level negotiations didn’t take a vacation.  “I think there’s been a great deal of movement by everybody, and I believe we’re going to get a bill done this session,” Corbett said on Radio PA’s Ask the Governor program.  “Particularly I would like to see a bill done before the budget address of February the 7th.” 

But some 20 environmental groups rallied in the capitol rotunda, this week, urging lawmakers to scrap both bills.  Among their biggest concerns are provisions that would limit the ability of local governments to regulate natural gas drilling.  “How can [the state] say that they have more expertise than a local community does over their environment, over their health, over what their people want,” says PennEnvironment’s Erika Staaf.  “I’m some areas the people might want a ban.” 

But Governor Corbett says uniform zoning rules are necessary to encourage investment and create jobs.  “Businesses, if there are going to invest in Pennsylvania – and they have been investing billions of dollars – have to know that there is consistency in the application of the zoning rules across the state.”  He says this is not a case of state government bending over backwards for the industry.