New Marcellus Drilling Law Passes PA House, Awaits Gov’s Sig

New Marcellus drilling legislation passed the Pennsylvania House yesterday by a vote of 101-90. The same measure passed the PA Senate earlier this week by a vote of 31-19. The only thing left before it becomes law is a signature by Gov. Tom Corbett, who said he looks forward to signing it. The new law will establish, for the first time in PA, a per-well-drilled impact fee. The fee is assessed on a sliding scale from $40,000 to $60,000 for the first year, decreasing each year for a 15-year period after that. The new law also tightens environmental regulations.

In order to win passage, a compromise was struck to split the impact fee: 60 percent of the fee will stay in the county where the well is drilled to provide money for road repairs and to cover an increase in public safety costs (fire and police); 40 percent is the “spread the wealth around” portion that will go to state projects like greenways, recreation trails, open spaces and beautification projects. That is, 40 percent will go to places like Philadelphia that don’t have drilling. It was the political pay-off necessary to make the bill pass.

Aside from the impact fee, perhaps the second biggest “bone of contention” in the new law was a provision that reduces the authority of local municipalities to regulate drilling. Local townships and cities have been using their authority to in some cases completely ban drilling within their borders—all it takes is two of three votes on a municipal zoning board. The compromise in the newly passed bill forces municipalities to allow drilling in residential-zoned areas, but it lets them apply zoning restrictions, as they do on other industries, for collateral effects like lighting and noise.

Here’s a roundup of the key provisions in the new law:

A retroactive impact fee for 2011.

The impact fee is structured on a sliding scale from $40,000 to $60,000 the first year depending on the price of natural gas and inflation with the fee declining over 15 years.

The Public Utility Commission will collect the impact fee revenue and distribute the money with 60 percent going to local governments covered under an impact fee ordinance and 40 percent for statewide uses, including Growing Greener, acid mine cleanup, affordable housing needs and rail freight assistance.

A driller can ask the PUC to determine whether a zoning ordinance is reasonable or not. If the PUC or state courts reject an ordinance, a municipality couldn’t collect impact fee revenue unless they changed it.

Increases notification to nearby property owners of well permit applications from 1,000 feet to 3,000 feet.

Extends setback distance for wells to 500 feet from existing buildings or water wells.

Establishes a 1,000 foot setback for a well from a water supply point used by a supplier.

Extends setback distance for wells to 300 feet from a stream, spring, body of water or wetland greater than one acre.

Increases the distance and duration of rebuttable presumption for a driller being responsible for pollution of a water supply from 1,000 feet to 2,500 feet and from six months to one year after the completion of a well.

Increases penalties for criminal violations from up to $300 to up to $1,000.*

*Wilkes-Barre The Citizens’ Voice (Feb 9, 2012) – Impact fee bill wins final approval

See also: Philadelphia Inquirer (Feb 9, 2012) – Pa. House approves fee on Marcellus Shale gas