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Pennsylvania Regulators Delay Implementing Impact Fee

The Pennsylvania Public Utility Commission (PUC) has delayed implementing Act 13, the state's omnibus Marcellus Shale law, "due to an ambiguity with an injunction imposed by the state's Commonwealth Court," the PUC said Thursday.

By a 5-0 vote the PUC postponed finalizing the order for Act 13, which includes the state's impact fee on unconventional gas drilling, until a later public meeting "due to questions surrounding the scope of an injunction issued by the state's Commonwealth Court."

The decision isn't expected to delay the collection of impact fees, which are due Sept. 1, according to PUC spokesperson Jennifer Kocher. "It isn't expected at this time that it will affect the collection of fees or their disbursement," Kocher told NGI.

On April 11 Judge Keith B Quigley pushed back the start date for portions of the law to give local governments more time to adopt its standardized zoning measures (see NGI, April 16). The law was originally scheduled to take effect on April 14, but Quigley pushed the effective date of a portion of the measure back 120 days. The PUC said Quigley's order was "ambiguous [about] whether it also enjoins the remainder" of Act 13, which the PUC is responsible for implementing.

The commission has filed an expedited application to modify the court's order.

Act 13 gives Pennsylvania counties the choice to collect an annual per-well fee from operators. The fee is set annually based on the price of gas and declines over 15 years but is set at $50,000 for all unconventional horizontal gas wells drilled through 2011. The revenue from the program is split between state and local governments, with the local share split between counties and the municipalities in those counties.

Commissioners in Bradford County, PA -- one of Pennsylvania's most prolific counties for unconventional natural gas drilling -- joined nearly all of their contemporaries in the Marcellus Shale and voted unanimously in favor of implementing the state's impact fee on unconventional gas drilling on April 12. All of the 37 counties that the County Commissioners Association of Pennsylvania (CCAP) classifies as having significant shale gas resources have voted to implement the impact fee. Luzerne County was the final county to make the decision, voting 6-5 in favor of the impact fee on April 16. According to CCAP, at least 11 non-shale counties have also either implemented or plan to vote in favor of the impact fee.

The state estimates that the program will bring in about $180 million this year and revenue will climb to $211 million in 2013 and $264 million in 2014. Bradford County, which accounts for nearly a quarter of all drilling in the state, could net $50 million by some estimates.

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