Senator Corman: Senate Approves Marcellus Shale Impact Fee Legislation

HARRISBURG –The Senate today approved legislation, which would establish an impact fee on gas drilling activity in the Marcellus Shale region, set environmental safeguards, strengthen oversight of the drilling industry, and help communities where drilling takes place, according to Sen. Jake Corman (R-Centre).

Corman supported House Bill 1950, which is expected to pass the House today and go to the governor for his signature. He said the measure was approved after months of negotiation and compromise in a number of areas, including funding allocation and local zoning issues.

“The Marcellus Shale industry has created new jobs and new opportunities, but there have been challenges as well because of the tremendous growth,” Corman said. “This impact fee ensures that drillers will pay their fair share, and communities that are affected will have the revenue they need to make environmental and infrastructure improvements.”

The legislation enables counties where drilling occurs to decide whether to impose a fee.   If a county declines to impose a fee, half of its municipalities, or municipalities representing at least 50% of the county’s population, would have the option to compel it to do so.

According to estimates, the fee proposal will raise approximately $180 million from wells that were drilled at any time through 2011. That figure would rise to $211 million next year and $265 million by 2013.  Over the next five years, the fee is expected to yield approximately $1.3 billion dollars.

Under the new law, 60 percent of the revenue raised from the fee would go to local governments impacted by drilling. Of that share, 37 percent would go to host municipalities, 36 percent to host counties and 27 percent to other municipalities in host counties. The money would be used to pay for a number of local services, from emergency preparedness to road, bridge and infrastructure projects.

The remaining 40 percent of the revenue will be used for statewide environmental projects, including  acid mine drainage remediation, water projects, flood control, statewide highway and bridge improvements, projects for open space, recreational trails and “beautification” projects, and hazardous sites cleanup.

“The impact fee is expected to generate tens of millions of dollars each year to help maintain roads and sewer systems in communities affected by the drilling,” said Corman.   “It would also fund statewide initiatives that finance infrastructure improvement, environmental cleanups and open space.”

Environmental safeguards included in the measure would increase well-bonding amounts, boost penalties for violations, require the disclosure of chemicals used in hydraulic fracturing, and require the posting of inspection reports on the Department of Environmental Protection’s publicly accessible Internet website.

The legislation increases setbacks from drinking water sources, wells and residences.  It also sets higher standards for drilling, wastewater treatment, and disposal, and it gives clear authority to the Department of Environmental Protection to deny or revoke drilling permits.

Corman said the legislation provides for standardized but flexible zoning standards which would allow communities to retain reasonable control over zoning power and encourage consistency in regulating the gas industry.

“This growing industry has brought jobs to our area, along with economic opportunities and the potential for energy independence – and it is here to stay because of the demand for natural gas,” Corman said.  “By establishing this reasonable and well-thought-out impact fee on shale companies, we can manage this tremendous resource in a way that improves our economy and protects our natural resources and quality of life.”

Scott Sikorski