Pennsylvania's potential adoption of a statewide impact fee on natural gas wells is poised to take another large step forward Wednesday (Oct. 26) when the state's Senate Appropriations Committee is scheduled to vote on Senate Bill (SB) 1100.

The legislation targeting Marcellus Shale development was introduced by Senate President Pro Tempore Joe Scarnati (R-Jefferson) in May and was marked up by the Environmental Resources and Energy Committee in June (see Shale Daily, June 15).

While similar to Gov. Tom Corbett's impact fee proposal (see Shale Daily, Oct. 4), which he unveiled earlier this month, SB 1100 does have some important differences. The marked-up amended version of the bill, obtained from lobbying firm Bigley and Blikle's Marcellus Minutes publication, shows that "price adjustment" and "volume adjustment" factors were struck from the legislation in June. What is left is a simple impact fee for all unconventional wells except marginal wells, which are classified as wells "incapable of producing 90,000 cubic feet of gas per day during a calendar month."

The Senate Appropriations Committee could further amend the bill, but sources close to the issue believe the panel will vote on it Wednesday virtually unchanged. Following the vote, SB 1100 will likely head to the full Senate sometime next week.

With price and volume fee adjustments off the table, the amended fee schedule per well is:

Under the proposed fee base, the impact fee for a well that operated for 10 years would be $160,000.

The amended bill also changes how the state can spend money raised from the fee. It directs $1 million per year to the State Fire Commissioner to support training programs for first responders in Marcellus Shale districts and to purchase special equipment; creates a housing credit program; limits funding for several environmental initiatives; and encourages operators to use acid mine drainage instead of fresh water for drilling and hydraulic fracturing.

Monies would be distributed to counties and municipalities under a formula that takes into account how much unconventional well activity is occurring in the jurisdictions. Funds generated by the fee would also be disbursed to the Conservation District Fund to be distributed to county conservation districts.