Legislative Watch: Pennsylvania Governor Signs Marcellus Shale Regulatory and Impact Fee Legislation
This post was written by Jennifer Smokelin
Yesterday, Pennsylvania Governor Tom Corbett announced he signed into law House Bill 1950, the Marcellus Shale bill. Under the legislation, Pennsylvania's counties will have the option of imposing a flat fee on well operators for each natural gas-producing well located in their county. It is likely that all counties will impose the fee. The flat fee, which may be retroactive in some cases, will be $40,000 to $60,000 for each well in its first year of operation, depending on the price of natural gas and inflation, with the annual fee declining over 15 years. In addition to the retroactive revenue-raising provisions in the legislation, there are also reporting requirements imposed on well operators. We will provide a detailed analysis in a later post, but high points of the legislation include:
- Establishes an impact fee (tax) on a sliding scale over 15 years for each well drilled, to be split 60/40, with 60 percent going to the county and 40 percent to the state.
- Municipalities can no longer regulate gas drilling in their borders, but they can still enact zoning restrictions to address truck traffic, noise, light and other industrial effects from drilling. If a driller believes a local zoning law is too restrictive, the driller can appeal it to the Public Utility Commission, who now becomes the referee for such disputes.
- Property owners within 3,000 of a well permit must be notified of the new permit (used to be 1,000 feet).
- New wells must be drilled at least 500 feet away from existing buildings or water wells (used to be 200 feet), and if it’s a supply point for public water supplies, the setback must be 1,000 feet.
- New wells must be drilled at least 300 feet away from streams, springs, bodies of water or wetlands greater than one acre (used to be 100 feet).
- Increases the amount of blanket bonds from $25,000 up to $600,000.
- Drillers must start using FracFocus.org to publicly disclose all chemicals used in the fracking of individual wells.
- Creates a Natural Gas Energy Development Program with incentives to convert truck fleets to compressed natural gas, liquefied natural gas, or bi-fuel vehicles. At least 50 percent of the funds must be used for grants to local transportation organizations, including mass transit agencies.
In terms of timing, the provisions authorizing counties to adopt ordinances imposing an impact fee go into effect immediately, and the remainder of the law takes effect in 60 days from February 14.