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House approves compromise plan for “impact fee” on natural gas drillers

2/10/2012 | Real Estate Blog

The Philadelphia Inquirer reported on Thursday that, after three years of debate and false starts on a plan to impose a local impact fee on natural gas drillers, the state is close to approving a measure. On Wednesday, the state House voted 101-90 to approve a compromise plan on the impact fee. Senate has already approved the measure, and now it goes to Governor Corbett, who has said he will sign it.

We have previously written about the bill, which has caused controversy in a number of areas, including zoning.

According to sources, the bill will direct most of the proceeds of the fee to the areas in northern Pennsylvania most affected by drilling. Philadelphia and other parts of the state, though, will also see some of the money.

The passage of the impact fee has not been without controversy. The compromise bill that was passed had been in the works for months. Many Republicans opposed the measure, and wanted Pennsylvania to remain the only major gas-producing state that did no tax natural gas production.

A victory for Republicans was that Governor Corbett refused to put a severance tax on drillers. The impact fee, which was born of the compromise, will fluctuate with the price of natural gas and beginning in 2013, the rate of inflation. So, if the natural gas price runs between $3 and $5, the fee would end up being $310,000 per well over a 15-year period. The fee increases if prices go over $5 and decrease if they fall below $3.

The bill also addresses in detail how the proceeds of the fee are to be distributed, zoning matters, as well as environmental and safety standards. We’ll take a look at these aspects of the bill in our next post.

Source: Philadelphia Inquirer, “Pa. House approves fee on Marcellus Shale gas,” Angela Couloumbis, Amy Worden, February 9, 2012.