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In Nod to Municipalities, Bradford County OKs Impact Fee

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 Thursday.

As of Thursday all but one 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 has tabled its decision until Monday.

In Bradford, Republicans Daryl Miller and Doug McLinko joined Democrat Mark Smith in approving the fee. McLinko, who also serves as board chairman, said he reluctantly voted in favor of the impact fee because a majority of the municipalities in the county supported it.

"Act 13 is a completely flawed piece of legislation," McLinko told NGI's Shale Daily on Thursday. "I don't fault the Corbett administration. They threw it in our laps and said, 'here, you folks figure it out.' Not one of our state [elected officials] had a town hall meeting to educate local municipal officials -- in the most drilled upon county in the state of Pennsylvania -- on what [the law] was."

Miller also said he reluctantly supported the measure. "Personally, I still have reservations about it," he told NGI's Shale Daily on Thursday. "It's increasing taxes and increasing the size of government, which are fundamentally objectionable to me. That being said, when you're handed lemons, the best thing you do is maybe try to make lemonade out of it."

And like McLinko, Miller said he disagreed with how the process was handled. "To have no town hall meetings, no input, no opportunity for a municipality to ask questions to get information from their legislators -- to me, I'm not sure it was the best way to have handled this," Miller said.

The commissioners said the county held a convention about two weeks ago to determine the position of its 14 boroughs, 37 townships and two unincorporated communities on the issue. "The majority of our municipalities agreed to support it," McLinko said. "Some were happy; some were not happy. A lot of them disagreed, but they all respected each other.

"I don't agree with the bill, but our municipalities spoke. And [I wanted to vote] before this went to the next phase, which would be the population-weighted vote. It would have torn our county apart, and I just wasn't going to let that happen."

Miller added, "I have to admire our municipal officials because under the circumstances, they came together. We did this as a county."

Smith could not be reached for comment Thursday.

Travis Windle, spokesman for the Marcellus Shale Coalition, said the group supported Bradford County's decision. "We absolutely respect the process and are confident that Bradford County, as well as every other locality with Marcellus development across the Commonwealth, will reach a decision based on what's best for its region," he told NGI's Shale Daily on Thursday.

If all eligible counties adopt the fee, the state estimates that the program would bring in about $180 million this year and revenue would 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.

According to CCAP, at least 11 non-shale counties have also either implemented or plan to vote in favor of the impact fee.

On Wednesday, Commonwealth Court Senior Judge Keith Quigley issued a 120-day injunction on parts of Act 13, the states' omnibus shale law that includes the impact fee plus environmental and drilling provisions. The delay only affects drilling rules of municipalities (see Shale Daily, April 12). Several oil and gas companies and industry groups support the law, but seven municipalities have filed suit, alleging Act 13's zoning restrictions usurp local authority (see Shale Daily, April 10; April 2).

Range Resources, one of the leading Marcellus Shale producers, said Thursday it is paying $24 million or 40 cents/Mcfe as a retroactive payment under the new law for shale wells drilled in previous years and another $13.6 million or 23 cents/Mcfe in production taxes for the first quarter of 2012 (see separate story).

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.

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