Marcellus/Utica Shale Legislation

The Marcellus /Utica Impact bill (Conference Committee Report) is local enabling legislation allowing communities and the Commonwealth to respond to impacts of unconventional drilling within the Commonwealth.

A Fair Bill That Balances Needs of Taxpayers, Business & the Environment

It is a fair bill allowing counties the option to impose an impact fee on Marcellus Shale gas wells in their communities to help mitigate local impacts of drilling. It also directs a portion of money collected to a variety of statewide infrastructure and environmental initiatives.

The Marcellus Shale natural gas industry has already created tens of thousands of jobs. By providing the industry with stability and predictability, as this legislation does, they should stay in Pennsylvania and create jobs and encourage related new businesses in the years to come.

What Does the Bill Do?

- creates uniformity to specifically help those communities dealing with the drilling;
- strengthens the laws, regulations and oversight to protect water and the environment;
- brings needed, dedicated funding for programs benefitting the state’s environmental resources.

The fee established by the bill fluctuates depending on the price of natural gas and, starting in 2013, on the rate of inflation.

Who Is Supporting This Legislation?

It is supported by environmental and local government associations as letters of support show:
PA State Association of Township Supervisors
Chesapeake Bay Foundation
County Commissioners Association of Pennsylvania
Renew Growing Greener
PA Association of Boroughs

>>> Watch Majority Leader Mike Turzai's floor remarks before the vote.
>>> Watch Republican Policy Chairman Dave Reed's floor remarks before the vote.

Dealing With Local Ordinances

• Preserves local government authority granted under the Municipalities Planning Code and the Flood Plain Management Act.
• Clarifies that local ordinances regulating industrial activities cannot be made more stringent for natural gas operations.
• Allows an operator, owner or anyone with royalty rights under a lease agreement to request the Public Utility Commission (PUC) to review a local ordinance to determine whether it violates the Municipalities Planning Code.

Dealing With Statewide Impacts

• The Pennsylvania Public Utility Commission (PUC) administers collection of the fee. Revenue will be distributed as follows:
o County conservation districts, which provide local support and conservation oversight of development projects.
o Fish and Boat Commission, for the review of permit applications related to unconventional gas wells.
o PUC, for administration of the fee collection and distribution.
o Department of Environmental Protection, for administration of the act and enforcement of clean air and water statutes.
o Pennsylvania Emergency Management Agency (PEMA), for emergency response planning, training and coordination related to natural gas production from unconventional wells.
o Office of the State Fire Commissioner, for the development, delivery and sustainment of training and grant programs for first responders.
o Rail Freight Assistance.
o Natural Gas Energy Development Program.
o After the disbursement above, 60 percent of revenue will be distributed to local government and the remaining 40 percent to statewide initiatives.

Dealing With Local Impacts

• Allows counties to decide whether to adopt a fee from Marcellus/Utica drillers. If a county opts not to impose the fee, municipalities may compel imposition of the fee.
• After initial distributions to impacted state agencies, 60 percent of revenue is dedicated to local governments. The money from the fees can be used for:
o Local roads and bridges.
o Water and sewer system construction and/or repair.
o Emergency response for training, equipment and/or recruitment.
o Preserving water supplies.
o Projects aimed at increasing the availability of affordable housing.
o County Conservation District assistance.
o Delivery of social services.
o Local planning.
o Local tax reduction.
o Career and technical centers for training workers in the oil and gas industry.

Helping Statewide Environmental, Infrastructure Concerns

• After initial distributions to impacted communities and agencies, 40 percent of revenue is dedicated to statewide initiatives addressing environmental concerns and infrastructure needs:
o Commonwealth Financing Authority, for grants to support the following: acid mine drainage abatement and cleanup, plugging abandoned oil and gas wells, watershed programs, flood control, and compliance with the state’s Sewage Facilities Act.
o Environmental Stewardship Fund (Growing Greener), which funds watershed improvements, acid mine drainage remediation, farmland preservation, and open space preservation.
o Highway Bridge Improvement Restricted Account, for replacement or repair of locally owned, at-risk bridges. Funds to be distributed proportionally based on population.
o Pennsylvania Infrastructure Investment Authority (PENNVEST), for support of sewer, storm water, and drinking water projects.
o Commonwealth Financing Authority (CFA), for support of sewer and water projects through the state’s H2O PA Act.
o Counties, for planning and development or rehabilitation and repair of greenways, recreational trails, open space, natural areas, community conservation and beautification projects, community and heritage parks, and water resources management. Funds will be distributed to counties based on population.
o The Hazardous Site Clean Up Fund (HSCF), for cleanup of contaminated sites
- HSCF funding will begin in 2014. Currently, it is funded by $40 million annually from the Capital Stock and Franchise Tax.

• In addition to fee revenue, portions of the Oil and Gas Lease Fund will be transferred to the Environmental Stewardship Fund and the Hazardous Sites Cleanup Fund.
o  The Oil and Gas Lease Fund was created in 1955 by the General Assembly.  It is funded by the sale of nonrenewable oil and gas resources owned by the state and reinvesting the money into public conservation assets benefiting all Pennsylvanians. 
o Historically, this fund averaged $3 million to $5 million a year before the Marcellus drilling started growing.
o The revenue from the increase in Marcellus Shale leases is up and conservatively estimated to generate $250-$500 million in royalties annually in the coming years.

Holding Drillers Responsible

The Marcellus/Utica Shale bill brings regulations up-to-date by addressing new technology in oil and gas development and provides greater protection and accountability.  The bill:
• Provides uniformity in safety standards.
• Requires operators to provide notice to property owners within 3,000 feet of the proposed well, as well as the host municipality or any municipality within 3,000 feet of the proposed well.

It helps ensure the safety of residents and local employers by:
• Increasing the setback distances:
o Between a private water well and an unconventional natural gas well from 200 feet to 500 feet.
o To streams, ponds, and other bodies of water from 100 feet to 300 feet.
o Restricts well drilling from within at least 1,000 feet of a public water supply, unless waived by the water supply operators.
• Prohibiting well sites in a flood plain if the site contains storage of hazardous materials, chemicals or cuttings. 

If accidents occur, the bill holds drillers accountable by:
• Increasing the civil penalties currently in the Oil and Gas Act.
• Requiring DEP to post well inspection reports through its website.
• Allowing DEP the authority to revoke a well permit for non-compliance with applicable state laws.

Natural Gas Energy Development

• Creates the “Natural Gas Energy Development Program” to provide grants to local transportation organizations to support conversions of vehicles to natural gas.
• Additional funding would support similar efforts by the Pennsylvania Turnpike, a Commonwealth Authority, nonprofit organizations, or private companies.