Marcellus Shale Bill Summarized

Gov. Corbett is expected to sign HB 1950, a comprehensive bill addressing Marcellus Shale. What’s inside the bill?

The Marcellus Shale impact tax included in HB 1950 falls short of being a principled impact fee. However, it is a victory for Pennsylvania workers and land owners that this was not imposed at the state level. Instead it allows counties to choose whether or not to enact the tax, which will hopefully create important tax competition.  Some counties have already said current relationships between government and the companies are already compensating for impacts.

One of the more negative aspects of the bill is that it is littered with corporate welfare. The graph below demonstrates how the revenue from the impact tax will be distributed. Right off the bat, an assortment of local and statewide programs are funded. The leftover revenue is split up with only 60% staying local and 40% going, again, statewide with much of the revenue going to non-drilling related projects. 

The bill also significantly increases drilling regulations and bonding requirements. Here’s a synopsis of those changes:

Marcellus Shale Regulatory Changes
Environmental Protection and Oversight Old Regulations New Regulations
Bond (per well) $2,500 $4000 per well under 6000 feet; increase per number of wells; $10,000 per well for depths of 6,000 feet or greater
Blanket Bond $25,000 Up to $250,000 for wells under 6,000 feet and up to $600,000 for wells over 6,000 feet
Setbacks from Private Water Wells Wells may not be drilled within 200 feet May not be drilled within 500 feet
Setbacks from Public Water Supply Systems 200 feet for waste pits and impoundments May not be drilled within 1,000 feet of existing supply extraction point
Setbacks from Buildings Wells may not be drilled within 200 feet of existing occupied structures, unless consent or Unconventional wells may not be drilled (well bore) within 500 feet of existing occupied structure, unless consent or variance
Presumed Liability for Impaired Water Supply Private water supplies within 1,000 feet of well Private water supplies within 2,500 feet
Duration of Presumed Liability for Impaired Water Supply six months One Year
Water Supply Restoration Obligations Restore or replace with adequate quantity and quality Restore or replace affected water supplies to assure compliance with PA Safe Drinking Water Act standards

Finally, the bill restricts local governments’ ability to target drilling through zoning and other regulations. Local governments retain the authority to pass ordinances (noise, lighting, etc.) so long as they don’t single out gas drilling. If a county’s ordinances doesn’t allow for the reasonable development of drilling (decided by the Pub­lic Util­ity Com­mis­sion or the courts), that county won’t be eligible for impact tax revenue.