New PA Bill an Overreaction to Court Ruling on Strippers

As previously reported, liberal Pennsylvania House of Representatives Democrat Pam Synder has now introduced a bill (HB 1283, copy below) to “clear up” what the state Public Utility Commission (PUC) is a loophole in the Act 13 law that may allow some drillers to avoid paying impact fees (i.e. drilling taxes) on some Marcellus Shale wells (see PA Lib Dem Introducing Bill to “Fix” Strippers Once and for All). In 2012 Pennsylvania passed the Act 13 law that includes a fee on wells targeting shale layers, including the Marcellus. Snyder Brothers, headquartered in Kittanning, PA, drills mostly conventional (vertical only) wells in southwestern PA. In 2011-2012 they drilled 45 vertical-only wells, targeting the Marcellus–all of the wells fracked. Initially those wells produced more than 90 Mcf/day, but by December of the year they were drilled, they produced less than 90 Mcf/day. The way the 2012 Act 13 law is written, if a well produces less than 90 Mcf/day during “any” month it is considered a stripper well and exempt from paying the impact fee. The state’s Public Utility Commission (PUC) assessed the fee anyway because for 11 months the wells produced more than 90 Mcf/day. Snyder Bros. sued and after an appeal of the case, won their case in March, exempting those wells from paying impact fees (see PA Court Says Snyder Bros Wells are Strippers, No Impact Fees Due). That sent the state Public Utility Commission (PUC) into a tizzy. The PUC and the PA Democrat Party is using the court case to try and accomplish two things they haven’t been able to accomplish heretofore: (1) claim this is a prime example of why a nosebleed high severance tax is needed, in this year’s budget, and (2) fundamentally change the intent of the Act 13 law by passing a “clarification” as introduced by Snyder’s HB 1283 bill. Below we explore this issue in depth and tell you why the Snyder case win is NOT a way for drillers to avoid paying impact fees. In fact, the court’s decision makes it clear that drillers cannot simply reduce production for one month and then claim it’s a stripper well under the 90 Mcf/day definition. Snyder’s bill is an overreaction and does not clear up anything. Instead, it changes everything…

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