Final impact fee bill clears first vote

BY ROBERT SWIFT

Times-Shamrock Writer

A bill that establishes a county-option Marcellus Shale drilling impact fee and provides some revenue for statewide environmental programs cleared a hurdle Monday with approval from a special legislative committee.

The action by the House-Senate conference committee on a 4-2 party-line vote sends the Republican-negotiated measure to each chamber for a vote with no amendments allowed.

The Senate plans to vote on the bill this morning, and a House vote could come later today.

The measure will allow counties inNortheast Pennsylvaniawith active Marcellus Shale wells to levy fees on drillers to offset the public costs of drilling operations. But neighboring Luzerne andLackawannacounties – which support the Marcellus industry with either pipelines, truck supply routes or planned compressor stations, but don’t have wells – won’t be able to impose fees.

Luzerne County will have no direct way under the bill to get monetary compensation for the damages to its roads from truck traffic or for pollution caused by environmental spills, said Sen. John Yudichak, D-14, Nanticoke, a conference committee member who voted against the bill.

Senate and House GOP leaders announced their agreement with Gov. Tom Corbett during the weekend on this comprehensive bill that establishes the impact fee, updates environmental rules for drilling activities and offers a degree of compromise on local zoning control over drilling.

The bill gives municipal officials an avenue to pursue an impact fee if county commissioners don’t want one. Half of the municipalities in a county could vote to authorize a countywide impact fee in that situation.

The distribution of impact fee revenue is tied to a municipality’s willingness to adopt zoning ordinances that provide for reasonable gas development and aren’t more stringent than for other industrial uses. The bill would allow wells, pipelines and compressor stations as a permitted use in all zoning districts, but give municipalities some leeway to set conditions on those activities in residential areas.

A municipality will be able to zone for well-related lighting, sound, buffer zone and setback issues in a residential area provided it’s no more stringent than for other industrial activities, said David Sanko, executive director of the Pennsylvania State Association of Township Supervisors.

However, a drilling operator could ask the state Public Utility Commission to determine whether a zoning ordinance is reasonable or not. If the PUC or state courts reject an ordinance, a municipality couldn’t collect impact fee revenue unless they changed it.

“It (bill) is turning 300 years of local zoning rights upside down,” said Mr. Yudichak.

“We’re looking for a balance to create jobs and protect the environment,” said Senate President Pro Tempore Joseph Scarnati, R-25, Jefferson Couty, referring to its zoning and environmental provisions.

Under the bill, the PUC also would have authority to collect the impact fee revenue and distribute the money with 60 percent going to local governments that have impacts and 40 percent left for statewide uses, including the Growing Greener program and affordable housing needs in rural counties such asBradfordCountyin drilling boom areas.

The Department of Community and Economic Development would get a share of impact fee revenues for three years to build a facility to convert natural gas to ethane, propane and other liquefied substances.

The impact fee would be structured on a sliding scale from $45,000 to $60,000 the first year depending on the price of natural gas and inflation with the fee declining over 15 years.

Some legislative estimates put the per-well revenue yield at more than $300,000 after 15 years, but Mr. Yudichak questioned how reliable any estimates are since there’s no guarantee any counties will adopt an impact fee.

The senator offered an alternate plan for a state-administered impact fee with full local zoning control, but it was defeated.

The bill sets an effective tax rate of 1 percent, which is a giveaway to drillers, said House Minority Whip Mike Hanna, D-76, Lock Haven.

The bill’s environmental protection provisions increase well setbacks for water wells from 200 feet to 500 feet and restrict a well from being located 1,000 feet from a public water supply. The measure drew opposition from PennFuture, an environmental group, and support from the County Commissioners Association of Pennsylvania and the Chesapeake Bay Foundation.

The measure, while not perfect, will help protectPennsylvania’s environment, said Pennsylvania CBF executive director Matthew Ehrhart.