Natural Gas Impact Fee Brings Hope to Struggling Townships

Posted: February 15, 2016

A recent article in the Pennsylvania Township News magazine shared how the PA natural gas impact fee helped rewrite the future for many townships. (more...)

The burgeoning shale industry in the past decade has made the Commonwealth one of the world’s top natural gas producers, but not without headaches that any increased growth can bring to a state or town.  While small, rural townships sitting on top of shale were initially impacted by these changes, they were also thankful for the economic boost to the region – and for the benefits reaped by Act 13.

Act 13 of 2012, also known as the Impact Fee, provides for the imposition of an unconventional gas well fee, and the distribution of those funds to local and state governments.  It contains rules as to how the impact fee may be spent.  More than half the funds are distributed directly to local governments in the shale region to cover the local impacts of drilling.  Also, several state agencies receive funding to be used for a variety of other purposes, such as county conservation districts, and the Marcellus Shale Legacy Fund, which supports grants for local infrastructure and environmental initiatives.

Townships are concerned that the impact fees will be replaced with a severance tax eyed for education and state coffers, thus not fairly shared with areas impacted by development.  Previously cash-strapped townships have found relief from the impacts of shale development in their area with the Act 13 impact fees.  They are able to get back on their feet and take care of projects put on hold due to lack of funds.  Here are just a few examples of how financial despair has been replaced by hope and positive outcomes:

Morris Township, Greene County:  With 154 active wells, $2.4 million has been brought into the township of 1.040 residents.  Bills can be paid, the  community center was upgraded and doubles as a Red Cross shelter during times of disaster, a full-time police officer was hired, a fire truck was paid off, and improvements to road equipment was made.

Cornplanter Township, Venango County:  Venango County, received $52,000 in Marcellus Shale Legacy funds in 2013, which was funneled down to townships.  The funds helped to replace an aging bridge limited to a 3-ton weight limit, a concern as fire and delivery vehicles could not use.  The roadmaster worked with a local contractor to develop a permanent, prefabricated steel bridge built on existing stone parapets with a $75,000 county grant.  The bridge replacement was completed in 5 days and cost $76,800, eliminating a safety concern and providing a bridge replacement model for the township.

Jackson Township, Tioga County:  The township received over $200,000 in impact fees in 2014, a god-send to a small rural township scrimping and scraping for money in the past.  Road improvements, much needed equipment upgrades, garage renovations, local volunteer fire department donations, and subsidized annual spring cleanup costs are some of the benefits reaped from the impact fees.

Lawrence Township, Clearfield County:  over $3 million in impact fees have been received by Lawrence Township, due to the large number of wells on state gamelands that cover over half the township.  More than $1 million has been invested in road paving, and have hired part-time police, donated to the fire company to help pay off three trucks.

As outlined in Act 13, the Pennsylvania Public Utility Commission (PUC) administers the collection and disbursement of the fees.  Additional information on the PUC’s role can be found here .

For the full story, please see the Pennsylvania Township News article, “Shale Success Stories” in the January 2016 issue.