Township Supervisors Prepare For Pennsylvania's New Drilling Law

Scott Detrow / StateImpact Pennsylvania

The impact fee's final 174-page draft

Aside from the drillers themselves, there’s probably no group of people more impacted by Pennsylvania’s new natural gas drilling law, Act 13, than township supervisors. The new impact fee will inject hundreds of thousands of dollars into their municipal budgets. Statewide zoning standards will either increase or scale back townships’ drilling regulations, depending on how robust their existing local ordinances are.
Township supervisors got the opportunity to ask Department of Environmental Protection and Public Utility Commission officials about the new legislation, during a session at the Pennsylvania Township Supervisors Association’s annual conference in Hershey.
Deputy DEP Secretary Scott Perry delivered a presentation on Act 13’s new environmental regulations and disclosure guidelines, pointing out the legislation requires municipalities to receive copies of every drilling permit filed with the department. Public Utility Commissioner Pamela Witmer also explained how the PUC would distribute money and determine whether or not local drilling ordinances abide by new state guidelines. The bulk of the township supervisors’ questions were directed to Witmer.

What’s clear, after an hour-long session on the legislation, is that many of the bill’s details still aren’t clear.
File the following facts under “To Be Determined”: how much money each municipality will receive from the fee; whether or not Commonwealth Court’s partial injunction will delay revenue payment; how long within the required 120-day window it will take for the PUC to approve or disapprove local ordinances. The partial injunction is responsible for much of the uncertainty.
The first question fielded by Witmer: when will municipalities be told how much money they can expect? “We are estimating there will be about $190 million total provided in 2012,” she said, but “until we see what your specific budget information is, we will not be able to tell you exactly how much money each local government will receive this year.” That’s because municipal fee revenue is capped at either $500,000 or half of the township’s 2010 budget – whichever amount is higher. Municipalities are required to submit their budget totals to the PUC in July.
Will a partial injunction delaying Act 13’s local zoning restrictions delay revenue payment? “I hate not to be able to answer that question, but I can’t,” Witmer said. “The injunction wasn’t easy to interpret,” she said, and the injunction “prevents us from, at least at this point, looking at local ordinance conformance. One of the criteria for receiving funds is conformance of local ordinances with Act 13.”
That’s not to say every municipalities’ regulations would need to be approved before they receive fee revenue. Local ordinances are presumed to comply with the new statewide restrictions unless they are challenged by drillers or municipal residents, or submitted by the township itself for review. Unless a municipality’s ordinance is being challenged, it would receive the money on time. The question is what happens if a review isn’t finished by the December 1 distribution deadline.
PUC filed an appeal asking Commonwealth Court for additional clarification on the full impact of its injunction, but the court denied the request.
As for the review process, Witmer said it “depends on how many requests for review” the PUC receives, “and how many advisory opinions” it issues. The PUC is required to turn opinions on whether or not local ordinances comply with statewide regulations within 120 days.
At one point, Witmer appeared to contradict PUC Chair Rob Powelson. In February, Powelson told StateImpact Pennsylvania the commission would be very aggressive about making sure municipalities spend impact fee revenue on the drilling-related purposes spelled out by the law. “One of the things I feel very strongly about is we will put forth the con­cept of a con­for­mance report that munic­i­pal­i­ties and coun­ties will have to fill out,” he said, “with detailed invoices on where they spent the money. …So we’re going to be very focused as a fis­cal watch­dog to make sure the money is spent appro­pri­ately, on the appro­pri­ate items that are pre­scribed in the legislation.”
When an audience member asked how strenuous reporting would be, and whether or not auditors would be involved, Witmer said, “We are trying to not make this at all burdensome. We have developed…the forms for you all to notify us.  All we’re going to ask is, tell us what it is you’re going to spend it on.”
“We’re not going to be going out and proactively auditing the use,” she added. “If it’s one of the 13 eligible categories, that’s it.”
While the bulk of the session’s questions focused on logistics, a handful of audience members criticized the legislation’s restrictions on local zoning, and criticized State Association of Township Supervisors for endorsing the bill. Representatives from two of the townships involved in the anti-impact fee lawsuit – Robinson and Cecil – asked critical questions.
“The letter we sent out [to legislators] in the end did not come directly out and say we were in total support of what the act is,” assistant PSATS executive director Elam Herr told the crowd, arguing the final product gave more freedom to local governments than earlier drafts of the bill. “Did we lose some[zoning rights?] Yes. Did we lose as much as we could have lost?”
PSATS’ letter to legislators did avoid fully endorsing the legislation, but StateImpact Pennsylvania interviewed executive director Dave Sanko immediately after the joint House-Senate conference committee approved the final version of the impact fee, and he offered full support for the bill.  “We have asked and will ask that the General Assembly approve the conference committee report,” he told us at the time.
The township supervisors’ conference features another forum on Act 13 this morning. Powelson, DEP Secretary Michael Krancer, and Corbett Administration Energy Executive Patrick Henderson will discuss the bill.