Marcellus Shale Bill Passed

Governor Corbett signed Act 13 of 2012, the “Marcellus shale bill” or House Bill 1950, into law on 2/14/2012.

Act 13’s proponents point to the improvements the law makes in the regulation of natural gas activities, arguing that the law provides protections far superior to those that otherwise would have been provided under the status quo. The bill’s opponents point to the bill’s deficiencies, arguing that legislators could have done much better and that, in the case of local zoning control, the law is a step backward.

The Act amends Title 58 (Oil and Gas) of the Pennsylvania Consolidated Statutes, “providing for an unconventional gas well fee and for transfers from the Oil and Gas Lease Fund; providing for distribution of fees and transfers; establishing the Natural Gas Energy Development Program; consolidating the Oil and Gas Act with modifications and additions relating to definitions, well permits, permit objections, comments by municipalities and storage operators, well location restrictions, well site restoration, protection of water supplies, notification to public drinking water systems, containment for unconventional wells, transportation records regarding wastewater fluids, corrosion control requirements, gathering lines, well control emergency response, hydraulic fracturing chemical discharge requirements, bonding, air containment emissions, public nuisances, enforcement orders, well control emergency cost recovery, penalties, civil penalties, inspection and production of materials, witnesses, depositions and rights of entry, third party liability and inspection reports; providing for local ordinances relating to oil and gas operations and for responsibility for fee; making an appropriation; and making a related repeal.”

The Pennsylvania House voted 101-90 on 2/8/2012 to adopt the conference report on House Bill 1950, the Marcellus shale legislation. Being a conference report, no amendments were allowed, only an up or down vote. The vote largely followed party lines with 99 Republicans and 2 Democrats voting “yes” and 10 Republicans and 80 Democrats voting “no”. The conference report was adopted by the Senate on 2/6/2012 in a 31-19 vote (26 Republicans and 5 Democrats in favor and 4 Republicans and 15 Democrats opposed).

View House Bill 1950

House Roll Call on Conference Report

Senate Roll Call on Conference Report

As natural gas industry operations take from our natural resources, the bill provides funding for Growing Greener-type projects to invest back into the conservation, restoration and enhancement of Pennsylvania’s land, water, wildlife and communities including the following:

Growing Greener – impact fee share: The Environmental Stewardship Fund, the funding source for Growing Greener receives dedicated infusions of cash from a 10% share of the 40% statewide share of the impact fee. Senate Republicans estimate that this will generate $14M total for 2011 (retroactively) and 2012, $29M in 2013, $46M in 2014 and $48M in 2015.

Growing Greener – OGLF share: The Environmental Stewardship Fund also receives $20M from the Oil and Gas Lease Fund in 2013 and $35M in 2014 and beyond — assuming there is sufficient money in the fund after DCNR gets its allocation, which is determined in the annual budget and fiscal code process. It appears that this will require annual vigilance to ensure that the funding intent is honored.

CFA: From the statewide share of the impact fee, 20% will go to the Commonwealth Finance Agency (CFA), an entity controlled by legislative leaders. This pot of money is projected to grow to $26M annually by 2015. It will be up to the political process to determine allocations between allowed uses, but money must be used for the following:

• Acid mines: damage, abatement and cleanup and mine reclamation, with priority given to projects which recycle and treat water for use in drilling operations.
• Orphan or abandoned oil and gas well plugging.
• Complying with the Pennsylvania Sewage Facilities Act Planning acquisition, development, rehabilitation and repair of greenways, recreational trails, open space, parks and beautification projects.
• Programs to establish baseline water quality data on private water supplies.
• Watershed programs and related projects.
• Up to 25% of funds may be utilized for flood-control projects.

County Initiatives: From the statewide share of the impact fee, 15% will be distributed to counties proportionately based on the population of the county. Like the county initiatives under the Growing Greener 2 bond issue, each county will make its own decisions regarding use of the funds within the rules established by the state. The funds must be used for any of the following: the planning, acquisition, development, rehabilitation and repair of greenways, recreational trails, open space, natural areas, community conservation and beautification projects, community and heritage parks and water resource management. Funds may be used to acquire lands for recreational or conservation purposes and land damaged or prone to draining by storms or flooding.

General Limitation: All or most of the funds distributed as described above may “not be used for the purpose of public relations, outreach not directly related to project implementation, communications, lobbying or litigation.”

Land Acquisition Requirement: Funds may not be used by an authorized organization “for land acquisition unless the authorized organization has obtained the written consent of the county and municipality in which the land is situated.”