A legislator in the Pennsylvania General Assembly on Monday said the state Public Utility Commission’s (PUC) decision to withhold nearly $1 million in impact fee revenue from four townships amounted to extortion.

Rep. Jesse White (D-Cecil) — an opponent of Act 13, the state’s new omnibus Marcellus Shale law, which generated more than $204 million this year — said the four townships in question were being punished because they are locked in a legal battle with state over Act 13’s zoning requirements.

“I don’t know what’s worse, the sorry and shameful hijacking and politicizing of the impact fee money, or the PUC’s blatant disregard for the law,” White said Monday. “To withhold impact fee money intended for critical needs such as road improvements and public safety from these townships at the epicenter of Marcellus Shale drilling activity isn’t just cruel, it’s clearly punitive and illegal.”

White’s district includes Cecil, Mount Pleasant and Robinson townships in Washington County, and part of South Fayette Township in Allegheny County. All are plaintiffs in the legal challenge to Act 13, Pennsylvania’s new omnibus Marcellus Shale law. The case is headed to an appeal before the state Supreme Court (see Shale Daily, Sept. 6; July 27; April 2).

On Monday, the PUC said producers have so far this year paid $204.2 million in impact fees, which are deposited into the state’s Unconventional Well Fund (see Shale Daily, Oct. 16). The agency calculated that municipalities will ultimately receive a $108.7 million share of that revenue.

But in documents released Monday, the PUC said disbursements to the four townships were being “withheld pending resolution of the requests for review [RFR] of existing ordinances.” The agency has received RFRs for all four townships (see Shale Daily, Sept. 20).

Section 3308 of Act 13 stipulates that if the PUC or the Commonwealth Court issues an order that a local ordinance violates the state Municipalities Planning Code, “the local government will be ‘immediately ineligible’ to receive any impact fee funds. The local government shall remain ineligible until it amends or repeals its ordinance or a determination that the local ordinance is unlawful is reversed on appeal.”

PUC spokeswoman Jennifer Kocher told NGI’s Shale Daily the agency is required to pay eligible localities by Dec. 1.

“We will meet our obligations under the law,” Kocher said Tuesday. “The payments are being held until the [RFRs] pending before the PUC are resolved via a commission order or Dec. 1, whichever comes first. This has nothing to do with the pending court proceedings but rather the proceedings before the PUC where local residents and/or producers have requested a review of the municipalities’ ordinances.

“Keep in mind, the law provides no provision for a refund. Meaning, if we paid a municipality money prior to Dec. 1 and the municipality was then found to be out of compliance with the law, we would have no way to seek a refund from that municipality.”

But White disagreed that the PUC had the power to withhold the revenue before that determination had been made. “This is another of the divide-and-conquer techniques used by the industry, and by extension Gov. [Tom] Corbett, to split communities and drum up support for their own agenda,” he said. “How can any reasonable person look at this situation and conclude this is anything other than political payback?”

The PUC said Mount Pleasant Township is owed $511,855.78 in impact fee revenue. Meanwhile, Cecil Township is to receive $246,098.00, Robinson Township $225,737.93 and South Fayette Township $2,731.39. All are supposed to get the revenue because they host Marcellus Shale operations.

Act 13, which was signed into law by Corbett in February, amended Title 58 (oil and gas) of the Pennsylvania Consolidated Statutes and empowered the PUC to collect the fee on behalf of local governments (see Shale Daily, Feb. 15). The law gives Pennsylvania’s counties the choice to collect an annual per-well fee from operators. The fee is set annually based on the price of natural 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 municipalities in those counties. The act states that only counties and municipalities that agree to be bound by the state-imposed oil and gas drilling rules could receive fee revenue. It is that latter part of the law that is being challenged.