UPDATED: Clearfield County Discusses Impact Fee Calculations

This article has been updated since its original publication to include updated figures regarding the impact fee calculations, which GantDaily.com received this morning from the Clearfield County GIS Department.

CLEARFIELD – In March, the Clearfield County Commissioners unanimously voted, 3-0, to impose an unconventional gas well impact fee and recently discussed the municipal impact fee calculations. The Public Utility Commission (PUC) has plans to release payments to the municipalities sometime in December.

In February, Gov. Tom Corbett signed House Bill 1950, the Marcellus Shale bill, which amended Title 58, Oil and Gas, of the Pennsylvania Consolidated Statutes. The bill authorized counties within the “shale regions” to adopt an impact fee. The impact fee will be used by local communities that are experiencing the actual impacts of unconventional shale gas development.

In 2011, Pennsylvania had 4,905 unconventional gas wells; of those, 131 gas wells were located in Clearfield County, according to documents provided by the county. It’s estimated that $206 million will be collected statewide from the imposition of the impact fee for the 2011 year. It’s estimated that $183 million will be available for statewide distribution by the PUC.

Sixty percent, or $109.8 million, will be directly distributed to impacted counties for 2011. Further, 40 percent, or $73.2 million, will also be distributed statewide through either population- or road-mileage-based formulas or through the awarding of competitive grants for addressing environmental and infrastructure impacts.

A portion of the fee will also be distributed to county conservation districts statewide. These allocations are as follows: in 2010, $2.5 million; in 2011, $5 million and in 2012 and each year after, $7.5 million, according to the house bill.

For 2011, Clearfield County registered a total municipal population of 81,642 and a total municipal highway road mileage of 1,135.11. Clearfield County Government has been allocated $1,055,692, according to Commissioner Joan Robinson-McMillen. The county’s host municipality share being collected is $1,085,017, while its all municipality share is $791,769. In all, the county is expected to receive $1,876,785.

Thirty-six percent of the fees are to be retained by the county, and 37 percent of the fees are to be distributed to the municipalities where producing unconventional gas wells are located. Each municipality’s amount is determined using a formula that divides the number of producing unconventional wells in the municipality by the number in the county. Then, it multiplies the resulting percentage by the amount available for distribution.

Twenty-seven percent of the fees are to be distributed to all municipalities in the county where producing unconventional gas wells are located as follows:

Lawrence Township has the greatest number of unconventional gas wells with 105. It has a municipal population of 7,681 and 90.18 roadway miles and has host municipality fee of $869,670. According to the impact fee formula, the township will receive $941,162.

“Lawrence Township will be able to receive its entire impact fee allocation. Their annual budget is just north of $2 million,” said John D. Kaskan, director of the Clearfield County GIS Department.

“The impact fee bill states that municipalities can get $500,000 or 50 percent of their annual budget, whichever is higher,” he further explained in an e-mail to GantDaily.com on Monday morning. “In this case, the $941,162 owed to Lawrence Township is less than 50 percent of their annual budget.”

On the other hand, Clearfield Borough doesn’t have any unconventional gas wells and is categorized as “contiguous.” It has a municipal population of 6,215 and 37.68 roadway miles. Robinson-McMillen described the borough as the “doughnut hole” of Lawrence Township. The borough, according to her, will receive a payment of $45,285 this year because of its highway mileage.

“I really want to stress that all of these dollar figures are estimates.  There are many variables that might affect the final dollars amounts,” said Kaskan. “One is the fact that vertical wells pay at a lower rate than horizontal wells.  Granted there aren’t that many vertical wells, but the numbers in this spreadsheet assume all the wells are horizontal wells.

“Another factor is that gas companies don’t pay the required amount to the state.  If the payments are not made to the state, the state will not be making up the difference on the mounts owed to the municipalities.”

The county must distribute the authorized fees within 45 days after the date the fees are received. According to the house bill, the county or municipality can use the fees for the following purposes associated with unconventional gas production within it:

For 2012, unconventional well fees are due by Sept. 1. Unconventional well fees are due by April 1 beginning in 2013. DEP will provide the PUC with lists of all unconventional wells. The fee is to be submitted to the PUC, according to the house bill.

The PUC may assess civil penalties on producers who fail to pay the fee of up to $2,500 per violation. PUC action must be brought within three years of the offense. Interest of 5 percent each month (not to exceed 25 percent in the aggregate) also may be assessed on late fees.

The PUC is required to provide the DEP with information necessary to determine that the applicant has paid all fees owed. The DEP may not issue a drilling permit to a producer that is delinquent on fees.  Also, the DEP must suspend existing drilling permits until the fee is paid, unless the producer has a pending appeal.

Robinson-McMillen noted that the PUC doesn’t compensate for any unconventional gas well that has been de-active for three or more years. She said the county has assigned 911 addresses for its gas wells, which helps them monitor unconventional gas well production within the county.

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