Senate Passes Bill to Establish Drilling Impact Fees, Increase Environmental Safeguards and Oversight

HARRISBURG — The state Senate this week approved legislation supported by Senator Jake Corman (R-Centre), that would establish reasonable impact fees on gas drillers, set strong environmental safeguards, and strengthens oversight of the Marcellus Shale drilling industry.

Corman said Senate Bill 1100  would impose a tax rate of approximately a 3 percent on gas production, retroactive to 2010.   The impact fee that is expected to generate tens of millions of dollars a year to help maintain roads and sewer systems in communities affected by the drilling.  It would also fund statewide initiatives that finance infrastructure improvement, environmental cleanups and open space.

The bill would impose a sliding fee of $50,000 per well in the first year of production, with a $10,000 reduction each subsequent year. Starting in the 11th year until the 20th year of the well, an annual fee of $10,000 is imposed.

According to estimates, the fee proposal would raise $94 million from wells that were producing gas this year, a figure that would rise to $155 million next year and $255 million by 2014.  Over the next five years the fee will yield more than $1 billion dollars.

Approximately 55 percent of the fees generated would go to counties and municipalities in the Marcellus Shale region and 45 percent to statewide infrastructure projects, environmental programs and other projects related to natural gas production.

Other funds also would be set aside for county conservation districts, firefighter training programs, the Fish and Boat Commission and for boosting availability of affordable housing.

The legislation also provide for standardized but flexible zoning standards which would allow communities to retain reasonable control over zoning power.

“This is a reasonable and well-thought-out measure that will help to promote this growing industry while also helping communities and protecting the environment,” Corman said.