Pennsylvania

Energy. Environment. Economy.

What Happens Now That Pennsylvania Legislators Have Passed An Impact Fee

Scott Detrow / StateImpact Pennsylvania

The Marcellus Shale impact fee's final draft

Pennsylvania’s House has passed a Marcellus Shale impact fee on a 101-90 vote.

Now that the legislation is on its way to Governor Corbett’s desk, what happens next? Here are some key milestones to look for.

Once Corbett signs the bill into law, counties hosting natural gas wells will have 60 days to pass an ordinance authorizing an impact fee within their borders. If a county’s commissioners don’t want a levy, they simply won’t hold a vote on the matter.

After the initial 60-day window ends, municipalities will have a chance to override any county commissioners who opt out of the impact fee.  If a township or borough wants a fee, it will need to pass a resolution reading, “The (insert name) in the county of (insert name) hereby resolves to have the county impose an unconventional gas well fee on each unconventional gas well spud in the county.” If more than half of a county’s municipalities do this within 60 days, the county’s fee will be enacted. The fee will also go into effect if counties representing more than 50 percent of the county’s total population pass the resolution.

September 1, 2012: The due date for retroactive 2011 fees. Senate Republican leaders estimate the fee will generate around $180 million, if every drilling county opts into the levy.

January 1, 2013: The bill requires natural gas drillers to post the chemicals they use during hydraulic fracturing on FracFocus.org. (This is something Marcellus Shale Coalition members have already begun doing on a voluntary basis.) Next January, the Department of Environmental Protection will evaluate the web site, and determine whether it’s providing enough well-by-well chemical information. If not, DEP may begin hosting the data on its website. (The impact fee marks a major improvement in Pennsylvania’s fracking disclosure regulations. Until now, companies have been required to report chemicals to the state, but the information has remained private.)

January 31, 2013: The Public Utility Commission will set 2012 fee rates. Per-well fees are based on a sliding scale. The PUC will set a rate based on two factors: changes in the Consumer Price Index, and 2012 natural gas rates.  Natural gas prices fluctuate on a daily basis, so the commission will arrive at the rate by taking the New York Mercantile Exchange’s natural gas price from the last day of every month, and averaging the 12 totals out.

April 1, 2013: 2012 fees are due. Legislative leaders estimate the second fee payment will generate about $211 million.

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