Towns Prepare for Marcellus Shale Impact Fees

By Laura Olson, Pittsburgh Post-Gazette
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HARRISBURG — For the tiny Columbia in Bradford County, the new gas drilling impact fee will yield a check later this year nearly equal to the township’s annual budget. The northeastern Pennsylvania township’s 1,200 residents have witnessed about 125 gas wells being drilled due to the Marcellus Shale boom — the most of any town in the commonwealth, according to the most recent state data.

While that data remains somewhat in flux as state officials and drillers fact-check a list of more than 4,800 gas wells, even conservative estimates show that the town is eligible for a check this fall of more than $1.1 million.

Their eventual payment won’t be quite that large due to a provision in the impact fee’s distribution scheme, limiting how much a town can receive to the larger of $500,000 or half of their municipal budget. Columbia’s budget isn’t much more than the half-million dollar limit, said township supervisor William Eick. Any local funds above the cap will be redirected into a fund for affordable housing projects.

“I don’t know what we’d do with a million dollars,” said Mr. Eick, whose property hosts eight of the town’s approximately 125 wells liable for the fee. “You can always put it in the roads.”

He and other local officials waited more than three years for state lawmakers to respond to their plea for money to help cope with the impacts of gas drilling. Still, in interviews last week, municipal officials repeatedly said they’re trying to refrain from counting the long-sought dollars until they are safely in hand.

“When it gets here, I’ll believe it,” Mr. Eick said. That’s not expected to occur until December. In the meantime, town officials have paperwork to return to the state Public Utility Commission and reading to do on how they are permitted to spend the pending dollars.

The new law outlines 13 specific areas for using the funds — including infrastructure, public safety and environmental programs — that also must be related to gas drilling. The most-cited way that local officials say they’re planning to use those new dollars is for road repairs. While many praised drillers for speedy paving jobs that repair heavy-traffic wear-and-tear, they said the extra funds can help fix other ailing roads or be saved for repairs to the driller-paved roads years after the industry leaves.

“They’ve lived up to their word, 100 percent,” said Lori Ziencik, secretary-treasurer for Frazer in northern Allegheny County. “We’re hoping that continues, and we can take this money and spread it farther.”

Beyond those highway facelifts, officials said serious discussions on other plans for the infusion of funds likely won’t begin until their budgeting work this fall.

“We have to really look at everything that you’re going to be allowed to use,” said Barb Shaffner, secretary of Lawrence Township in Clearfield County, which would see one of the larger impact fee checks, likely topping $900,000.”Once a figure comes out there, it’s going to be like, ‘Wow.’ ”

One challenge has been the wavering revenue estimates. Officials in the Greene County municipality of Cumberland say they’ve heard multiple figures for how much of the impact fee pie they should expect to see for their 70 wells. That’s due to the complicated way in which the dollars are to be doled out, as well as to the shifting tallies for the state’s wells.

The state Department of Environmental Protection has posted a spreadsheet that continues to be revised, detailing where each “spud,” or drilled, well is located and whether each is a horizontal or vertical well. All horizontal shale wells are liable for the fee, though only vertical wells producing a certain amount of gas must pay.

After that list is finalized, the Public Utility Commission will release a formula clarifying the distribution. Sixty percent will go to local governments, including approximately $39 million directly to townships with gas drilling and another $29 million to towns in counties with gas drilling regardless of whether they host wells, based on their population and miles of highway roads.

The state’s association of township supervisors has formulated its own projections for what each town could expect, but assistant executive director Elam Herr said the group strongly emphasizes that they are estimates. According to the association’s estimates, towns with no wells like Rome and Alba in Bradford County could see fees of $26,000 and $10,700, respectively. Calculations by the Post-Gazette show that a handful of Washington and Greene County towns could see checks larger than $500,000. Cumberland’s $2.4 million annual budget means it could see $650,000 or more, and Washington County’s Chartiers Township could be eligible for more than $600,000.

Others, like Frazer, will be looking at smaller checks, closer to $55,000 — though officials there said that more wells are planned for drilling this summer and could boost next year’s totals. But the fee isn’t all that townships are preparing for — many also say they’re combing through their ordinances to see what changes will be required to comply with the new state law. Mr. Herr from the township association said the group has received dozens of requests for a new model ordinance, which the association will be releasing shortly.

Officials also are keeping a close eye on a lawsuit challenging the zoning provision of the law, which limits how local governments can regulate drilling activity. Parties in that suit will present their arguments to a panel of Commonwealth Court judges on Wednesday.