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Pennsylvania Auditor General to Investigate Marcellus Impact Fee Spending

The Pennsylvania Department of the Auditor General plans to launch an investigation into how Marcellus Shale impact fee distributions are being spent and reported by the counties and municipalities across the state that receive them.

Producers have paid nearly $856 million since the impact fee was enacted in 2012 (see Shale Daily, June 11), but more than $30 million has gone unreported by municipalities and counties mostly because they failed to report the funds properly during the first year they were disbursed and spent.

Auditor General Eugene DePasquale said last week that his department would likely start an investigation by 2017. He said it would take that much time before staff become available to do the work and added that more collections and distributions would provide for enough records to analyze.

The impact fee is charged for all unconventional wells in the state during their first 15 years in operation, regardless of how much they produce. It is calculated with a multi-year schedule that is based on the average annual price of natural gas. The Pennsylvania Public Utility Commission (PUC) collects the fees from producers and distributes them to counties, municipalities and state agencies. DePasquale said his office has primarily received complaints about impact fee spending from the northeast and southwest parts of the state, where shale drilling is heaviest.

The department said about $20 million of the unaccounted fees went unreported during the first year filing was required. When the legislation was signed into law in February 2012 it did not require state audits of local spending (see Shale Daily, Feb. 15, 2012). The PUC details government spending of impact fees on a special website with information reported by localities and while it has argued that the law is very clear, municipalities have maintained that they don't have the staff to meet reporting requirements or have demonstrated in their filings that they are unclear about what exactly needs to be reported.

State records available on the PUC's website show that some impact fee spending has gone unreported. But most of the money has been used for emergency preparedness, water preservation and public infrastructure, among other things. In 2014, Washington, Bradford and Susquehanna counties received the most money, with each taking in about $6 million. 

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