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.
In July 2012, the Commonwealth Court threw out a section 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 December 19, 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 aesthetic 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.
On January 2, 2014 the Corbett administration asked the state Supreme Court to reconsider its decision. Corbett’s General Counsel James Schultz said the court “made its own sweeping factual findings regarding the impact of Act 13″ without giving the state an opportunity to present its own evidence.
In the decision, the Supreme Court sent some provisions of the law back down to the lower Commonwealth Court, including the question of whether the rest of Act 13 can stand without the portions that were struck down.
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 2012, drillers paid $45,000 per well. (Smaller, vertical wells were $9,000.)
The impact fee brought in $204 million to Pennsylvania for 2011, and $202 million during 2012. There was less money in 2012 because the fees are tied to the price of natural gas, which declined by a third.
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 2012 :
- Bradford $6.9 million
- Washington $4.6 million
- Tioga $4.3 million
- Lycoming $4.3 million
- Susquehanna $4.1 million
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.)