Pennsylvania

Energy. Environment. Economy.

Topics

The Commonwealth Court has upheld several sections of the state's oil and gas law,  including a provision dealing with doctors' access to the chemicals used in hydraulic fracturing.

The oil and gas law of the land: your guide to Act 13

Background

cabot_drill_site12

Lindsay Lazarski/WHYY

Act 13 is a major overhaul of Pennsylvania’s oil and gas law.

After years of deliberation on the issue, legislators passed the bill on February 8, 2012.

The Zoning Battle

Over the past two years portions of Act 13 have been caught up in an ongoing legal battle.

The case has pitted a number of local governments against the Corbett administration. The main issue centers on who gets to decide how to zone oil and development.

In July 2012, the Commonwealth Court threw out a section of the law restricting local governments’ ability to zone and regulate natural gas drilling. The Corbett administration appealed the decision to the Supreme Court of Pennsylvania.

In a 4-2 decision in December 2013, the State Supreme Court agreed with the lower court, and held that portions of the law restricting local zoning were unconstitutional.

One section of the law that was struck down called for statewide rules on oil and gas to preempt local zoning rules. Another section required municipalities to allow oil and gas development in all zoning areas.

In the majority opinion, written by Chief Justice Ronald Castille, the court determined both those provisions violate the Environmental Rights Amendment of the state constitution which guarantees Pennsylvanians the right to, “clean air, pure water, and to the preservation of the natural, scenic, historic and esthetic values of the environment.”

Castille cited the state’s history with coal and timber as lessons which lead to the amendment.

“Pennsylvania has a notable history of what appears, retrospectively, to have been a shortsighted exploitation of its bounteous environment, affecting its minerals, its water, its air, its flora and fauna and its people,” he wrote.

But the high court’s ruling didn’t close the case for good. In its December 2013 decision, the Supreme Court sent some provisions of the law back down to the lower Commonwealth Court.

Despite the legal battle, most of the law will remain in tact. The Commonwealth Court was only examining a narrow set of issues.

In a July 2014 ruling, the Commonwealth Court threw out most of the remaining challenges to the law, but it upheld the notion that local governments– not the state– have the authority to zone oil and gas development.

Appeals are possible from both sides.

The Fee

Act 13 places a so-called “impact fee” on every well drilling for gas in the Marcellus Shale formation. The levy changes from year to year based on natural gas prices and the Consumer Price Index, but in 2013, gas companies paid $50,000 for each new well they drilled. (Smaller, vertical wells were $10,000.)

So far, the impact fee has brought in $630 million to Pennsylvania ($204 million in 2011, $202 million during 2012, and $224 million in 2013). The amounts change annually based on the number of wells drilled and the price of natural gas.

Sixty percent of the impact fee revenue stays at the local level, going to counties and municipalities hosting wells. The rest goes to various state agencies involved in regulating drilling and to the Marcellus Legacy Fund– which gets spread out around the state for environmental and infrastructure projects.

These are the top five counties receiving the most impact fee money in 2013 :

  • Bradford  $7 million
  • Washington $6.1 million
  • Susquehanna $5.5 million
  • Lycoming $5 million
  • Tioga $4.4 million

Other Changes

Other notable aspects of the legislation:

  • The bill authorizes the annual trans­fer of mil­lions of dol­lars from the Oil and Gas Lease Fund to the Envi­ron­men­tal Stew­ard­ship Fund and Haz­ardous Sites Cleanup Fund.
  • Drillers’ zone of presumed liability will expand from 1,000 to 2,500 feet. That means if a water source within this area is contaminated, the assumption will be that drilling messed it up.
  • The Depart­ment of Envi­ron­men­tal Pro­tec­tion can “enter into con­tracts” with pri­vate well con­trol teams, who would be given lim­ited immu­nity from civil lawsuits.
  • Com­pa­nies would be required to sub­mit reports to DEP detail­ing chem­i­cals used dur­ing the hydraulic frac­tur­ing process. This infor­ma­tion would be pub­lished on FracFocus.org, which is becom­ing a national clear­ing­house for frack­ing dis­clo­sure information.
  • Civil penal­ties against drillers who vio­late reg­u­la­tions would be increased to $75,000.
  • The bill sets new bond lev­els for drillers, based on the length of well bores and the amount of wells each com­pany operates.

(For more details about what’s in the new law, read our annotated version of the impact fee.)

Latest Posts

Governor Tom Corbett says the impact fee is still the best deal for Pennsylvanians

Governor Tom Corbett speaks about taxing the Marcellus Shale in an interview at WHYY in Philadelphia

StateImpact Pennsylvania’s Susan Phillips sat down with both candidates for governor and pressed them on energy issues. The candidates visited WHYY in Philadelphia, where several reporters interviewed them for about ten minutes each. Wolf has proposed taxing the Marcellus Shale gas differently than Governor Corbett. Wolf wants to charge a 5 percent tax on the [...]

Democrat Tom Wolf talks extraction tax and protecting the environment

Democrat Tom Wolf talks to reporters at the WHYY studio in Philadelphia.

StateImpact Pennsylvania’s Susan Phillips sat down with both candidates for governor and pressed them on energy issues. The candidates visited WHYY in Philadelphia, where several reporters interviewed them for about ten minutes each. Wolf has proposed taxing the Marcellus Shale gas differently than Governor Corbett. Wolf wants to charge a 5 percent tax on the [...]

While pushing gas tax, Wolf vague on how much money would stay local

At a campaign stop in Harrisburg Friday, Democratic gubernatorial candidate Tom Wolf repeated his pledge to enact a new tax on Pennsylvania’s natural gas production. “I want to put a five percent severance tax on that gas,” he told a crowd of supporters. “And do it responsibly, from an environmental point of view.” Gas companies [...]

Fracking in Texas helps the state’s public school fund top Harvard’s endowment

A fund that collects rents and royalties from oil and natural gas development to Texas public schools recently became the largest education endowment in the country. The publicly run endowment, called the Permanent School Fund, is worth $37.7 billion dollars. That’s $1.3 billion more than Harvard University’s $36.4 billion endowment. Jim Suydam, a spokesperson for [...]

Corbett says taxing natural gas may be a future option

Governor Tom Corbett says he’s thinks taxing natural gas could be an option. Just three weeks before the election, the governor is battling for his political future. In an exclusive interview with StateImpact Pennsylvania, Corbett said he thinks rather than the extraction tax advocated by his Democratic opponent Tom Wolf, it may be better to tax [...]

Gas industry nervously awaits outcome of governor’s race

When members of Pennsylvania’s largest gas industry trade group got together for their annual conference last week they were a bit worried. Why? Anyone paying attention to voter polls or listening to the rhetoric coming out of Harrisburg knows there is the very real possibility of two major changes for the gas industry— a new Democrat [...]

Corbett says public misunderstands impacts of gas tax

Republican Governor Tom Corbett said at a news conference Tuesday that the public may be misinformed about the consequences a severance tax could have on the natural gas industry in Pennsylvania. A new poll from the University of Michigan shows a majority of residents support a tax on gas production – a measure Corbett has long [...]

Public Utility Commission appeals Commonwealth Court decision on Act 13

Pennsylvania’s Public Utility Commission has appealed a recent Commonwealth Court decision, which stripped the agency of its authority to review local zoning ordinances regarding Marcellus Shale natural gas drilling. The state’s drilling law, enacted in 2012, gave the PUC authority to decide whether or not a municipality’s zoning ordinances complied with the state constitution and [...]

Audit questions whether Pa. lawmakers understand fracking

A key question during Pennsylvania’s natural gas boom centers on how much damage it’s done to water resources. According to new information released this week by the state Department of Environmental Protection, water supplies around the commonwealth have been damaged by oil and gas operations 209 times since the end of 2007. This is the [...]

About StateImpact

StateImpact seeks to inform and engage local communities with broadcast and online news focused on how state government decisions affect your lives.
Learn More »

Economy
Education