PA Impact “Fee” Year 2: Revenue Goes Down, Slightly

In early 2012, Pennsylvania enacted the most sweeping rework of oil and gas laws in the state in decades (see Gov. Corbett Signs New Marcellus Drilling Law). Called Act 13, one of the provisions of the law is an “impact fee” collected on each horizontal shale well drilled. The fee is intended to offset the impacts of drilling in places where drilling happens, hence the name. However, in order to get enough support to pass Act 13, politics were played and 40% of the “fee” got re-allocated to non-impact uses—i.e., 40% of the fee became a tax (see PA’s New Tax on Drilling (er Sorry, Impact Fee)). Once the dust settled and the bugs were worked out of the new fee/tax by the state Public Utility Commission—the agency tasked with calculating and collecting it—the first year raised $204 million in revenue (see PA Impact Fee Raises More Revenue than Expected).

The preliminary estimates are now out for the second year, and the fee/tax for year #2 has gone down—from $204 million to $198 million, according to Gov. Tom Corbett. Why? The price of natural gas was lower in 2012 than it was in 2011, putting the fee collected into a different “bracket” (see this page for the somewhat complicated grid that determines how fees are calculated). Gov. Corbett’s comments about year #2 impact fee revenue:

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