Pennsylvania

Energy. Environment. Economy.

Topics

The Commonwealth Court has upheld several sections of the state's oil and gas law,  including a pr

The oil and gas law of the land: 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 three years, portions of Act 13 were 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 remained intact. 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.

The state Public Utility Commission appealed that decision in August 2014, arguing it maintains the right to review local zoning ordinances. The Supreme Court could hear oral arguments in the case as early as this fall.

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.So far, the impact fees have brought in $853.5 million to Pennsylvania:

  • 2011: $204 million
  • 2012: $202 million
  • 2013: $225 million
  • 2014: $223.5 million

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 2014 :

  • Washington $6.5 million
  • Bradford $6.4 million
  • Susquehanna $6.1 million
  • Lycoming $4.8 million
  • Greene $4.5 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

Marcellus Shale drillers fined for methane migration

State environmental regulators say three natural gas drillers contaminated 17 separate drinking water wells in north central Pennsylvania and together the companies have paid close to $375,000 in fines. The Department of Environmental Protection blamed well construction for methane migrating into drinking water supplies. If methane builds up in an enclosed space like a house, [...]

Feds show Pennsylvania gas revenues sharply lower than other leading producers

As Pennsylvania lawmakers continue to wrangle over whether to impose a severance tax on natural gas production, a new study finds that the state derives dramatically less revenue from its gas industry than some other leading oil and gas states that have a severance tax. The study from the U.S. Energy Information Administration showed Friday [...]

State says gas industry still ignoring minority, female hiring law

A state agency says the oil and gas industry is failing a requirement to report on hiring of women and minority owned businesses. The Department of General Services is calling on the legislature to make it harder for the industry to avoid its reporting requirements. It says 70 percent of businesses it contacted did not [...]

Senate Republican leader isn’t ruling out gas tax

Governor Tom Wolf and state lawmakers are still at an impasse over the budget. Now, three weeks into the new fiscal year, Senate Majority Leader Jake Corman is signaling he may be open to one of Wolf’s top priorities– a new tax on gas drillers. Corman (R- Centre) tells the Pittsburgh Tribune-Review he won’t rule [...]

Industry, education advocates face off over gas tax

Dueling rallies between the natural gas industry and public education advocates sparked some heated exchanges at the state Capitol Tuesday. Education advocates disrupted a pro-gas rally and drowned out speakers by shouting, “Tax the shale!” Iraq war veteran Tony Caldarelli fired back, saying that the United States has sought more energy security since the 1970s. “Are [...]

DEP seeks record fine of $8.9 million from Range Resources

The Pennsylvania Department of Environmental Protection announced a record fine today against the Texas-based Range Resources, which the agency says has failed to fix a gas well that polluted groundwater and a stream in Lycoming County. The DEP announced Tuesday that it will assess an $8.9 million fine against Range for refusing to fix the [...]

As budget negotiations heat up, so does rhetoric over gas tax

As the June 30th state budget deadline draws near, Republican legislative leaders are taking aim at the centerpiece of Governor Wolf’s spending plan—a new severance tax on natural gas drillers. Senate Republican leaders issued a statement Tuesday saying they have “severe concerns” about the tax, but House Speaker Mike Turzai (R- Allegheny) called a press [...]

Wolf’s gas tax would be among highest in nation, says Independent Fiscal Office

Governor Wolf made taxing the natural gas industry the centerpiece of his campaign, and if he gets his way, he could move Pennsylvania from having one of the lowest effective gas tax rates in the country to one of the highest. That was the analysis presented Monday at a joint senate committee hearing in Harrisburg [...]

Industry launches new TV ad opposing shale tax

The battle over Governor Wolf’s shale gas tax proposal took an acrimonious turn last week with dueling letters between the industry and the governor. Now the television ads have arrived. The Pennsylvania Chamber of Business and Industry, which leads a coalition of groups opposing the shale gas tax, has begun running an ad against Governor [...]

Energy industry invests in Philly mayor’s race

Since Marcellus Shale development boomed, Philadelphia has been a thorn in the side of the gas industry. The city has not seen many of the economic benefits that places like Williamsport, or Pittsburgh have. And it tends to be home to well-organized, experienced environmental groups used to taking on powerful adversaries. When the industry invited [...]

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