What Is Act 13 (Impact Fee)?
April 1, 2013: 2012 impact fees are due.
Legislative leaders estimate the second fee payment will generate about $211 million.
After years of deliberation on the issue, Pennsylvania legislators passed a bill overhauling the state’s natural gas drilling laws on February 8, 2012.
Act 13 became law when Governor Corbett signed House Bill 1950 on Feb. 14, 2012.
The Fee
The legislation places an impact fee on every well drilling for gas in the Marcellus Shale formation. The levy will change from year to year based on natural gas prices and the Consumer Price Index, but in 2012, drillers will paid $50,000 per-well. (Smaller, vertical wells will pay $10,000 this year.)
The law provides for the imposition of an unconventional gas well fee (also called a drilling impact fee), and the expenditure of the funds generated by that impact fee to local and state purposes specifically outlined in the law. The law also contains a mechanism as to how the fees shall be distributed. A significant portion of the fees generated will be used to cover the local impacts of drilling while several of state agencies will also receive funding for a variety of other purposes.
The law specifically provides for the imposition of an unconventional well fee by county (or alternatively municipalities compelling the imposition of an unconventional well fee). A county may impose the fee if unconventional gas wells are located within its borders and it passes an ordinance within 60 days of the effective date of the act. A county that does not pass an ordinance imposing a fee shall be prohibited from receiving funds. This prohibition shall remain in effect until a county passes an ordinance imposing a fee.
Restricting Local Power
In addition to setting a fee, the legislation restricts municipal zoning of drilling operations. Townships and municipalities are required to allow drill rigs in all types of zones, except for densely-populated residential areas. It sets state standards for the minimum distance between wells and streams, schools, buildings and water sources. If a local government passes ordinances and regulations that go beyond the new state standards, the Public Utility Commission will have the power to bar the municipality from receiving any impact fee money.
Our assessment at PA Oil & Gas Report is that this impact fee system actually does not substantially affect royalty owners in the same way severance taxes in other states do. While the “impact fee” generates revenue similar to “severance tax”, the “impact fee” does not require landowners/royalty owners to share in the fee, and rather imposes the fee directly onto the drillers. So, if you are a landowner worried about your bottom line, the “impact” fee does not create a deduction from a landowners’ royalty payments.
To View A Copy Of The Bill, please click on: http://stateimpact.npr.org/pennsylvania/2012/02/06/here-it-is-the-impact-fee-bill/#more-6790
To View an Overview Of The Impact Fee please click on: https://www.act13-reporting.puc.pa.gov/Modules/PublicReporting/Overview.aspxFor an overview of impact fee
