Overview: Counties may implement a local impact fee on unconventional well drilling to be collected and distributed at the county level.

Impact Fee Schedule (not to exceed)

Year 1: $40,000

Year 2: $30,000

Year 3: $20,000

Year 4: $10,000

Year 5: $10,000

Year 6: $10,000

Year 7: $10,000

Year 8: $10,000

Year 9: $10,000

Year 10: $10,000

Local Distribution

· 75% to host counties and their municipalities.

• 36% to host county.
• 37% to host municipalities.
• 27% to all municipalities within a host county.
• 50% based on population formula.
• 50% based on highway mileage.

· 25% to restricted account in the General Fund.

• 70% to the Department of Transportation.
• 10.5%, not to exceed $10 million annually, to the Department of Environmental Protection.
• 7.5%, not to exceed $2 million annually, to the Public Utility Commission.
• 4.5% , not to exceed $2 million annually, to the Pennsylvania Emergency Management Agency.
• 3.75%, not to exceed $2 million annually, to the Department of Health.
• 3.75%, not to exceed $2 million annually, to the Office of State Fire Commissioner.

· Any money remaining in the restricted account after the distribution of the fees shall be distributed to the Department of Transportation.

· Language enumerates acceptable uses of the funds by counties and municipalities.

• Construction, reconstruction, maintenance and repair of roadways, bridges, and public infrastructure.
• Construction, reconstruction, maintenance of water, storm water, and sewer systems.
• Emergency preparedness and response.
• Preservation and reclamation of waters and water supplies, including drinking water monitoring and testing.
• Records management, geographic information systems and information technology.
• Increasing availability of affordable housing for low income.
• Social services.
• Assistance to county conservation districts for oversight of gas development.
• County or municipal planning.
• Local tax reduction.

Environmental Funds

Source: Oil and Gas Lease Fund

The General Assembly created the Oil and Gas Lease Fund in 1955, taking the money from the sale of nonrenewable oil and gas resources owned by the state and reinvesting this money into public conservation assets benefiting all Pennsylvanians. Historically, this fund averaged $3 million to $5 million a year before the Marcellus drilling boom. However, the Marcellus Shale boom was not realized at the time of the creation of this fund. Revenue from the increase in the number of Marcellus Shale leases is up and conservatively estimated to generate $250-$500 million in royalties annually in the coming years.

Proposal:

Dedicate a portion of the Oil and Gas Lease Fund to environmental programs.

July 1, 2013 and Each Fiscal Year Thereafter

· $15 million to conservation districts.

· 25% of total received funds of the prior fiscal year to the Environmental Stewardship Fund.

· 5% up to $5 million for payment in lieu of taxes (communities w/ State Forest land).

July 1, 2014 and Each Fiscal Year Thereafter

· $40 million to the Hazardous Site Clean Up Fund. This transfer will be updated annually based on the CPI (inflation rate).

o The HSCF currently receives $40 Million annually from the Capital Stock and Franchise Tax. The tax is set to expire January 2014.

Other Proposal Provisions

· Under this proposal, unconventional vertical wells are assessed a fee of no more than 25% of the fee established by the local ordinance.

· Includes full pre-emption for all local ordinances.

· Prohibits the well impact fee costs from being passed on to the property owner or leaseholder.

· Provides exemptions from the fee for: 1) Shallow wells above the Elk Sandstone (non-Marcellus wells); and 2) Wells that produce an average of less than 90,000 cubic feet of gas a day over a reporting period.

· The Auditor General may audit a county’s and municipality’s expenditures of the funds received from an imposed impact fee.

· Each county collecting an impact fee must submit a report detailing the expenditure of the funds collected to the House of Representatives and Senate.