Pennsylvania’s gas impact fees rise to $209 million this year

Money goes to local governments, but there is little oversight of how it's spent

  • Marie Cusick

Local governments in Pennsylvania will receive $209,557,300 this year in impact fees levied on Marcellus Shale gas companies, marking the third highest total since the fees went into effect in 2012.

The amount is about $36 million higher than last year, according to the state Public Utility Commission, which collects and distributes the fees. The increase is driven by a higher number of wells being drilled and an uptick in the average annual price of natural gas.

“The calculations are based on activity last year,” PUC spokesman Nils Hagen-Frederiksen said. “So the producers were required to submit their reports to the commission this spring, and the distributions go out to municipalities by the first of July.”

The impact fee money is collected annually and funneled to local governments, with the largest share going to the most heavily-drilled areas. Over the years, it has brought in more than $1.4 billion. The money also goes to state agencies, like the Department of Environmental Protection, that oversee the industry and to the Marcellus Legacy Fund, which gets spread out around the state and can be used for conservation purposes.

David Spigelmyer, president of the Marcellus Shale Coalition, a natural gas industry trade group, said the fees are working as designed and enable “local governments to direct how the revenues are utilized.”

Local governments can spend the impact fee money 13 different ways, including on things like public infrastructure improvements, emergency preparedness, affordable housing, judicial services, and environmental programs. A 2016 report by the state Auditor General Eugene DePasquale criticized the lack of oversight in how governments were spending the impact fee money.

The law does not provide any mechanism for the Public Utility Commission or any other state agency to audit the expenditures.

The fees are levied on a per-well basis and bear no relationship to gas production totals — which have continued to soar each year, topping 5 trillion cubic feet in 2016.

For nearly a decade, state lawmakers have debated whether to enact a severance tax on gas production. Gov. Tom Wolf, a Democrat, has spent much of his first term pushing such a tax, which is common in most other major energy states and would tax the volume of gas produced.

The gas industry and many Republican leaders in the legislature argue such a tax would suppress investment and harm job creation.