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Steptoe & Johnson PLLC: Pa. General Assembly Set To Pass Marcellus Impact Fee Regulations

By Russell L. Schetroma

Earlier today, the Pennsylvania Senate passed measures to govern the extraction of natural gas from the swath of Marcellus shale underlying the state.  The plan now moves to the House of Representatives where it is expected to pass a final vote. 

The Senate approved H.B. 1950 by a 31-19 margin modifying Title 58 of the Pennsylvania Consolidated Statutes.  The bill will allow municipalities to levy impact fees on natural gas wells that could generate millions in annual revenue.  The fees would be dictated by a sliding scale based on the price of natural gas.  The Public Utility Commission will oversee collection and distribution of the fees levied by municipalities. According to the Pittsburgh Post-Gazette, the fee could raise more than $190 million retroactively for 2011.       

The measure also expands environmental regulations including increased penalties and setbacks from waterways and disclosure of chemicals used in the hydraulic fracturing process.  The bill also mandates additional procedures for handling spills.  In addition, municipalities would be prohibited from disproportionately regulating drilling over other industries or risk loss of fee revenues.    

On February 3, 2012, Pennsylvania Governor Tom Corbett signed S.B. 995 into law.  The law requires the Pennsylvania Department of Environmental Protection and Pennsylvania Emergency Management Agency to adopt regulations that direct unconventional well operators to:

  • Adopt a unique GPS address for each unconventional gas well,
  • Register that address with both agencies as well as local emergency management organizations,
  • Develop an emergency response plan and file it with state and local first responders, and
  • Post a reflective sign at the entrance to each site with the address of the site, GPS coordinates and contact information for the well operator.

S.B. 995 became effective with the Governor’s signature.

Russell L. Schetroma focuses his practice in the areas of energy and oil and gas law.