TITLE 58
OIL AND GAS
Part
I. (Reserved)
II. Oversight and Development
III. Utilization
Enactment. Unless otherwise noted, the provisions of Title 58 were added February 14, 2012, P.L.87, No.13, effective in 60 days.
Special Provisions in Appendix. See sections 2, 6, 7 and 8 of Act 13 of 2012 in the appendix to this title for special provisions relating to fiscal year 2011-2012 appropriation, legislative intent, Department of Transportation statement of policy and pipeline placement for natural gas.
PART I
(Reserved)
Enactment. Part I (Reserved) was added February 14, 2012, P.L.87, No.13, effective in 60 days.
PART II
OVERSIGHT AND DEVELOPMENT
Enactment. Part II was added February 14, 2012, P.L.87, No.13, effective in 60 days.
Chapter
23. Unconventional Gas Well Fee
25. Oil and Gas Lease Fund
27. Natural Gas Energy Development Program
CHAPTER 23
UNCONVENTIONAL GAS WELL FEE
Sec.
2301. Definitions.
2302. Unconventional gas well fee.
2303. Administration.
2304. Well information.
2305. Duties of department.
2306. (Reserved).
2307. Commission.
2308. Enforcement.
2309. Enforcement orders.
2310. Administrative penalties.
2311. (Reserved).
2312. Recordkeeping.
2313. Examinations.
2314. Distribution of fee.
2315. Statewide initiatives.
2316. Small business participation.
2317. Applicability.
2318. Expiration.
Enactment. Chapter 23 was added February 14, 2012, P.L.87, No.13, effective immediately.
Special Provisions in Appendix. See section 5 of Act 13 of 2012 in the appendix to this title for special provisions relating to application of law.
Cross References. Chapter 23 is referred to in sections 2703, 3308, 3502 of this title.
§ 2301. Definitions.
The following words and phrases when used in this chapter shall have the meanings given to them in this section unless the context clearly indicates otherwise:
"Average annual price of natural gas." The arithmetic mean of the New York Mercantile Exchange (NYMEX) settled price for the near-month contract, as reported by the Wall Street Journal for the last trading day of each month of a calendar year for the 12-month period ending December 31.
"Company." An entity doing business within this Commonwealth and subject to tax under Article III, IV or VI of the act of March 4, 1971 (P.L.6, No.2), known as the Tax Reform Code of 1971.
"Commission." The Pennsylvania Public Utility Commission.
"Department." The Department of Environmental Protection of the Commonwealth.
"Eligible applicant." Any of the following:
(1) A county, municipality, council of governments, watershed organization, institution of higher education or nonprofit organization.
(2) An authorized organization as defined in 27 Pa.C.S. § 6103 (relating to definitions).
(3) A company, other than a producer.
"Fee." The unconventional gas well fee imposed under section 2302 (relating to unconventional gas well fee).
"Fund." The Unconventional Gas Well Fund.
"Highway mileage." The number of miles of public roads and streets most recently certified by the Department of Transportation as eligible for distribution of liquid fuels funds under the act of June 1, 1956 (1955 P.L.1944, No.655), referred to as the Liquid Fuels Tax Municipal Allocation Law.
"Municipality." A borough, city, town or township.
"Natural gas." A fossil fuel consisting of a mixture of hydrocarbon gases, primarily methane, and possibly including ethane, propane, butane, pentane, carbon dioxide, oxygen, nitrogen and hydrogen sulfide and other gas species. The term includes natural gas from oil fields known as associated gas or casing head gas, natural gas fields known as nonassociated gas, coal beds, shale beds and other formations. The term does not include coal bed methane.
"Number of spud unconventional gas wells." The most recent numerical count of spud unconventional gas wells on the inventory maintained and provided to the commission by the department as of the last day of each month.
"Population." As follows:
(1) Population of the Commonwealth and population of a county shall be determined using the United States Census Bureau's most recently released Annual Estimates of the Resident Population for Counties of Pennsylvania.
(2) Population of a municipality shall be determined using the United States Census Bureau's most recently released Annual Estimates for the Resident Population for Incorporated Places in Pennsylvania.
(3) Population of municipalities not included in the report referenced under paragraph (2) shall be determined using the United States Census Bureau's most recently released Annual Estimates of the Resident Population for Minor Civil Divisions in Pennsylvania.
"Producer." A person or its subsidiary, affiliate or holding company that holds a permit or other authorization to engage in the business of severing natural gas for sale, profit or commercial use from an unconventional gas well in this Commonwealth. The term shall not include a producer that severs natural gas from a site used to store natural gas that did not originate from the site.
"Spud." The actual start of drilling of an unconventional gas well.
"Stripper well." An unconventional gas well incapable of producing more than 90,000 cubic feet of gas per day during any calendar month, including production from all zones and multilateral well bores at a single well, without regard to whether the production is separately metered.
"Unconventional formation." A geological shale formation existing below the base of the Elk Sandstone or its geologic equivalent stratigraphic interval where natural gas generally cannot be produced at economic flow rates or in economic volumes except by vertical or horizontal well bores stimulated by hydraulic fracture treatments or by using multilateral well bores or other techniques to expose more of the formation to the well bore.
"Unconventional gas well." A bore hole drilled or being drilled for the purpose of or to be used for the production of natural gas from an unconventional formation.
"Vertical gas well." An unconventional gas well which utilizes hydraulic fracture treatment through a single vertical well bore and produces natural gas in quantities greater than that of a stripper well.
§ 2302. Unconventional gas well fee.
(a) General rule.--The governing body of a county that has a spud unconventional gas well located within its borders may elect whether to impose a fee on unconventional gas wells that have been spud in the county.
(a.1) Passage of ordinance.--Within 60 days after the effective date of this section, the governing body of a county under subsection (a) may adopt an ordinance to impose an unconventional gas well fee. The governing body of a county must notify the commission and give public notice of its intent to adopt the ordinance.
(a.2) County ordinance.--The ordinance imposing a fee under subsection (a.1) shall be clear and in language that is readily understandable by a layperson and shall be in the following form:
The county of (insert name) hereby imposes an unconventional gas well fee on each unconventional gas well spud in this county.
(a.3) Prohibition.--
(1) A county subject to this section, in which the governing body does not adopt an ordinance imposing an unconventional gas well fee within 60 days of the effective date of this section, shall be prohibited from receiving funds under sections 2314(d)(1) (relating to distribution of fee) and 2315(a.1)(3) and (5) (relating to Statewide initiatives).
(2) The prohibition on receiving funds shall remain in effect until the county adopts an ordinance imposing an unconventional gas well fee. The prohibition shall expire and funds may be received for the calendar year following the adoption of an ordinance imposing the fee under this section.
(a.4) Alternate imposition.--
(1) If the governing body of a county does not impose an unconventional gas well fee under subsection (a), the municipalities in the county may compel the imposition of an unconventional gas well fee on each unconventional gas well spud in the county by adopting resolutions under paragraphs (2), (3) and (4).
(2) Following 60 days but not more than 120 days after the effective date of this section, if the governing bodies of at least half of the municipalities located in a county or municipalities representing at least 50% of the population of the county adopt resolutions to impose unconventional gas well fees on all unconventional gas wells spud in the county, the fee shall take effect. If a resolution is adopted, a copy of the resolution shall be transmitted to the governing body of the county and the commission. The governing body of a municipality that is located in more than one county shall transmit a copy of a resolution adopted under this paragraph to the governing body of each county in which the municipality is located.
(3) The transmittal of resolutions by governing bodies under paragraph (2) shall constitute an imposition of the fee in that county. The population of a municipality that is located in more than one county shall be determined separately for each county on the basis of the municipality's population within each county.
(4) Resolutions adopted under this subsection must be framed in the following form:
The (insert name) in the county of (insert name) hereby resolves to have the county impose an unconventional gas well fee on each unconventional gas well spud in the county.
(5) A municipality which is located in a county that does not adopt an ordinance imposing an unconventional gas well fee and which does not adopt a resolution under paragraphs (2), (3) and (4) shall be prohibited from receiving funds under section 2314(d).
(b) Components.--The fee adopted under subsection (a), (a.1) or (a.4) is imposed on every producer and shall apply to unconventional gas wells spud in this Commonwealth regardless of when spudding occurred. Unconventional gas wells spud before the fee is imposed shall be considered to be spud in the calendar year prior to the imposition of the fee for purposes of determining the fee under this subsection. Prior to adjustment under subsection (c), the fee for each unconventional gas well shall be determined as follows:
(1) Year one:
(i) If the average annual price of natural gas is not more than $2.25, the fee shall be $40,000 for the calendar year in which the unconventional gas well is spud.
(ii) If the average annual price of natural gas is greater than $2.25 and less than $3.00, the fee shall be $45,000 for the calendar year in which the unconventional gas well is spud.
(iii) If the average annual price of natural gas is greater than $2.99 and less than $5.00, the fee shall be $50,000 for the calendar year in which the unconventional gas well is spud.
(iv) If the average annual price of natural gas is greater than $4.99 and less than $6.00, the fee shall be $55,000 for the calendar year in which the unconventional gas well is spud.
(v) If the average annual price of natural gas is more than $5.99, the fee shall be $60,000 for the calendar year in which the unconventional gas well is spud.
(2) Year two:
(i) If the average annual price of natural gas is not more than $2.25, the fee shall be $30,000 for the calendar year following the year in which the unconventional gas well is spud.
(ii) If the average annual price of natural gas is greater than $2.25 and less than $3.00, the fee shall be $35,000 for the calendar year following the year in which the unconventional gas well is spud.
(iii) If the average annual price of natural gas is greater than $2.99 and less than $5.00, the fee shall be $40,000 for the calendar year following the year in which the unconventional gas well is spud.
(iv) If the average annual price of natural gas is greater than $4.99 and less than $6.00, the fee shall be $45,000 for the calendar year following the year in which the unconventional gas well is spud.
(v) If the average annual price of natural gas is more than $5.99, the fee shall be $55,000 for the calendar year following the year in which the unconventional gas well is spud.
(3) Year three:
(i) If the average annual price of natural gas is not more than $2.25, the fee shall be $25,000 for the second calendar year following the year in which the unconventional gas well is spud.
(ii) If the average annual price of natural gas is greater than $2.25 and less than $3.00, the fee shall be $30,000 for the second calendar year following the year in which the unconventional gas well is spud.
(iii) If the average annual price of natural gas is greater than $2.99 and less than $5.00, the fee shall be $30,000 for the second calendar year following the year in which the unconventional gas well is spud.
(iv) If the average annual price of natural gas is greater than $4.99 and less than $6.00, the fee shall be $40,000 for the second calendar year following the year in which the unconventional gas well is spud.
(v) If the average annual price of natural gas is more than $5.99, the fee shall be $50,000 for the second calendar year following the year in which the unconventional gas well is spud.
(4) Years 4, 5, 6, 7, 8, 9 and 10:
(i) If the average annual price of natural gas is not more than $2.25, the fee shall be $10,000 for the third through ninth calendar years following the year in which the unconventional gas well is spud.
(ii) If the average annual price of natural gas is greater than $2.25 and less than $3.00, the fee shall be $15,000 for the third through ninth calendar years following the year in which the unconventional gas well is spud.
(iii) If the average annual price of natural gas is greater than $2.99, the fee shall be $20,000 for the third through ninth calendar years following the year in which the unconventional gas well is spud.
(5) Years 11, 12, 13, 14 and 15:
(i) If the average annual price of natural gas is less than $3.00, the fee shall be $5,000 for the 10th through 14th calendar years following the year in which the unconventional well is spud.
(ii) If the average annual price of natural gas is greater than $2.99, the fee shall be $10,000 for the 10th through 14th calendar years following the year in which the unconventional well is spud.
(6) For purposes of this subsection, the fee shall be determined using the average annual price of natural gas for the calendar year in which the fee is imposed.
(b.1) Nonproducing unconventional gas wells.--If a spud unconventional gas well begins paying the fee imposed under this section and is subsequently capped or does not produce natural gas in quantities greater than that of a stripper well within two years after paying the initial fee, then the fee shall be suspended:
(1) The fee shall be reinstated for a calendar year during which the unconventional gas well produces natural gas in quantities greater than that of a stripper well.
(2) Each calendar year during which a fee is suspended shall not be considered a calendar year following spud for purposes of determining the amount of the fee under subsection (b).
(c) Annual adjustment.--Beginning January 1, 2013, the commission shall annually adjust the fee amounts under subsection (b) to reflect any upward changes in the Consumer Price Index for all Urban Consumers for the Pennsylvania, New Jersey, Delaware and Maryland area in the preceding 12 months and shall immediately submit the adjusted fee amount to the Legislative Reference Bureau for publication as a notice in the Pennsylvania Bulletin. The fee shall be adjusted by multiplying the annual fee amount by any percentage increase to the Consumer Price Index for all Urban Consumers for the Pennsylvania, New Jersey, Delaware and Maryland area, rounded to the nearest $100. The resultant product shall be added to the fee amount, and the sum shall become the new annual fee amount under subsection (b). The annual adjustment under this subsection shall take effect if the total number of unconventional gas wells spud in the adjustment year exceeds the total number of unconventional gas wells spud in the prior year.
(d) Restimulated unconventional gas wells.--
(1) An unconventional gas well which after restimulation qualifies as a stripper well shall not be subject to this subsection.
(2) The year in which the restimulation occurs shall be considered the first year of spudding for purposes of imposing the fee under this section if:
(i) a producer restimulates a previously stimulated unconventional gas well following the tenth year after being spud by:
(A) hydraulic fracture treatments;
(B) using additional multilateral well bores;
(C) drilling deeper into an unconventional formation; or
(D) other techniques to expose more of the formation to the well bore; and
(ii) the restimulation results in a substantial increase in production.
(3) As used in this subsection, the term "substantial increase in production" means an increase in production amounting to more than 90,000 cubic feet of gas per day during a calendar month.
(e) Cessation.--Payments of the fee shall cease upon certification to the department by the producer that the unconventional gas well has ceased production and has been plugged according to the regulations established by the department.
(f) Vertical unconventional gas well fee.--The fee for a vertical unconventional gas well shall be 20% of the fee established in subsections (b) and (c), except that the fee under subsection (b)(5) shall not apply.
Cross References. Section 2302 is referred to in sections 2301, 2305, 2308, 2314 of this title.
§ 2303. Administration.
(a) Fee due date.--
(1) Except as provided under paragraph (2), the fee imposed under this chapter shall be due by April 1, 2013, and each April 1 thereafter. The fee shall become delinquent if not remitted to the commission on the reporting date.
(2) For wells spud before January 1, 2012, a fee imposed under this chapter shall be due by September 1, 2012.
(b) Report.--By September 1, 2012, and April 1 of each year thereafter, each producer shall submit payment of the fee to the commission and a report on a form prescribed by the commission for the previous calendar year. The report shall include the following:
(1) The number of spud unconventional gas wells of a producer in each municipality within each county that has imposed a fee under this chapter.
(2) The date that each unconventional gas well identified under paragraph (1) was spud or ceased the production of natural gas.
(c) Costs of commission.--
(1) The commission may impose an annual administrative charge not to exceed $50 per spud unconventional gas well on each producer, to be paid with the submission under subsection (a), to pay for the actual costs of the commission to administer and enforce this chapter.
(2) Within 30 days of the effective date of this subsection, the commission shall estimate its expenditures through June 30, 2012, that will be directly attributable to the administration and enforcement of this chapter. The commission shall subtract the amount of the administrative charges imposed under paragraph (1) and assess any remaining balance on all producers subject to the administrative charge in proportion to the number of wells owned by each producer. Producers shall pay the assessments within 30 days of receipt of notice from the commission. The amount of the assessment may be challenged by a producer consistent with 66 Pa.C.S. § 510(c), (d) and (e) (relating to assessment for regulatory expenses upon public utilities). Any collections that exceed any of the following shall be used to offset the administrative charges or other funds received for fiscal year 2012-2013:
(i) The budget amount approved by the General Assembly and the Governor for administration and enforcement of this chapter and Chapter 33 (relating to local ordinances relating to oil and gas operations).
(ii) The actual expenditures directly attributable to the administration and enforcement of this chapter and Chapter 33.
(3) By June 30, 2012, and each June 30 thereafter, the commission shall estimate its expenditures for the next fiscal year that will be directly attributable to the administration and enforcement of this chapter. After subtracting any annual administrative charges imposed under paragraph (1), amounts received by the commission under section 2314(c.1)(2) (relating to distribution of fee) and any amounts collected during the prior fiscal year that exceeded actual expenditures directly attributable to the administration and enforcement of this chapter, the commission shall assess the remaining balance on all producers subject to the unconventional gas well fee in proportion to the number of wells owned by each producer. Producers shall pay the assessments within 30 days of the receipt of notice from the commission. The amount of the assessment may be challenged by a producer consistent with 66 Pa.C.S. § 510(c), (d) and (e). Any collections that exceed any of the following shall be used to offset administrative charges or assessments for the next fiscal year:
(i) The budget amount approved by the General Assembly and the Governor for administration and enforcement of this chapter and Chapter 33.
(ii) Actual expenditures directly attributable to the administration and enforcement of this chapter and Chapter 33.
Cross References. Section 2303 is referred to in sections 2307, 3211 of this title.
§ 2304. Well information.
(a) List.--Within 14 days of the effective date of this section, the department shall provide the commission and, upon request, a county, with a list of all spud unconventional gas wells from the department. The department shall update the list and provide it to the commission on a monthly basis.
(b) Updates.--A producer subject to the fee shall notify the commission of the following within 30 days after a calendar month in which the change occurs:
(1) The spudding of an unconventional gas well.
(1.1) The initiation of production at an unconventional gas well.
(2) The removal of an unconventional gas well from production.
§ 2305. Duties of department.
(a) Confirmation of payment.--Prior to issuing a permit to drill an unconventional gas well in this Commonwealth, the department shall determine whether the producer has paid all fees owed for an existing unconventional gas well under section 2302 (relating to unconventional gas well fee).
(b) Prohibition.--The department shall not issue a permit to drill an unconventional gas well until all unconventional gas well fees owed under section 2302 that are not in dispute have been paid to the commission.
(c) Payment of fees.--The commission shall provide the department with information necessary to determine that the producer has paid all unconventional gas well fees owed for an unconventional gas well under section 2302.
§ 2306. (Reserved).
§ 2307. Commission.
(a) Powers.--The commission shall have the authority to make all inquiries and determinations necessary to calculate and collect the fee, administrative charges or assessments imposed under this chapter, including, if applicable, interest and penalties.
(b) Notice.--If the commission determines that the unconventional gas well fee has not been paid in full, it may issue a notice of the amount due and demand for payment and shall set forth the basis for the determination.
(c) Address.--Notice of failure to pay the correct fee shall be sent to the producer via certified mail.
(d) Time period.--Except as set forth in subsection (e), the commission may challenge the amount of a fee paid within three years after the date the report under section 2303(b) (relating to administration) is filed.
(e) Intent.--If no report is filed or a producer files a false or fraudulent report with the intent to evade the fee, an assessment of the amount owed may be made at any time.
Cross References. Section 2307 is referred to in section 2308 of this title.
§ 2308. Enforcement.
(a) Assessment.--The commission shall assess interest on any delinquent fee at the rate determined under section 2307(a) (relating to commission).
(b) Penalty.--In addition to the assessed interest under subsection (a), if a producer fails to make timely payment of the fee, there shall be added to the amount of the fee due a penalty of 5% of the amount of the fee if failure to file a timely payment is for not more than one month, with an additional 5% penalty for each additional month, or fraction of a month, during which the failure continues, not to exceed 25% in the aggregate.
(c) Timely payment.--If the commission determines that a producer has not made a timely payment of the fee, the commission shall send written notice of the amount of the deficiency to the producer within 30 days from the date of determining the deficiency. The commission shall notify the department of a producer that has failed to pay the fee for any unconventional gas well under section 2302 (relating to unconventional gas well fee). If the producer does not have a pending appeal related to payment of the fee in process, the department shall suspend the permit for that well until the fee has been paid.
(d) Remedies.--The remedies provided under this chapter are in addition to any other remedies provided by law or in equity.
(e) Lien.--Fines, fees, interest and penalties shall be collectible as authorized by law for the collection of debts. If the producer liable to pay an amount neglects or refuses to pay the amount after demand, the amount, together with costs, shall be a judgment in favor of the Commonwealth upon the property of the producer, but only after the judgment has been entered, docketed and recorded by the prothonotary of the county where the property is situated. The Commonwealth shall transmit to the prothonotaries of the respective counties certified copies of the judgments. Each prothonotary shall enter, docket and record the record in the prothonotary's office and index each judgment, without requiring the payment of costs as a condition precedent to the entry of the judgment.
§ 2309. Enforcement orders.
(a) Issuance.--The commission may issue an order as necessary to enforce this chapter. An order issued under this section shall take effect upon notice, unless the order specifies otherwise. A person aggrieved by an order under this section may appeal to Commonwealth Court under 42 Pa.C.S. § 763 (relating to direct appeals from government agencies).
(b) Compliance.--A producer has the duty to comply with an order issued under subsection (a). If a producer fails to proceed diligently to comply with an order within the time required, the producer shall be guilty of contempt and shall be punished by the court in an appropriate manner. The commission shall apply to Commonwealth Court, which shall have jurisdiction over matters relating to contempt.
§ 2310. Administrative penalties.
(a) Civil penalties.--In addition to any other proceeding authorized by law, the commission may assess a civil penalty not to exceed $2,500 per violation upon a producer for the violation of this chapter. In determining the amount of the penalty, the commission shall consider the willfulness of the violation and other relevant factors.
(b) Separate offense.--Each violation for each separate day and each violation of this chapter shall constitute a separate offense.
(c) Limitation of actions.--Notwithstanding any limitation in 42 Pa.C.S. Ch. 55 Subch. B (relating to civil actions and proceedings), an action under this section must be brought within three years of the violation.
(d) Procedure.--A penalty under this chapter is subject to 66 Pa.C.S. Ch. 3 Subch. B (relating to investigations and hearings).
§ 2311. (Reserved).
§ 2312. Recordkeeping.
A producer liable for the fee under this chapter shall keep records, make reports and comply with regulations of the commission. The commission may require a producer to make reports, render statements or keep records as the commission deems sufficient to determine liability for the fee.
§ 2313. Examinations.
(a) Access.--The commission or its authorized agents or representatives shall:
(1) Have access to the relevant books, papers and records of any producer in order to verify the accuracy and completeness of a report filed or fee paid under this chapter.
(2) Require the preservation of all relevant books, papers and records for an appropriate period not to exceed three years from the end of the calendar year to which the records relate.
(3) Examine any employee of a producer under oath concerning the severing of natural gas subject to a fee or any matter relating to the enforcement of this chapter.
(4) Compel the production of relevant books, papers and records and the attendance of all individuals who the commission believes to have knowledge of relevant matters in accordance with 66 Pa.C.S. (relating to public utilities).
(b) Unauthorized disclosure.--Any information obtained by the commission as a result of any report, examination, investigation or hearing under this chapter shall be confidential and shall not be disclosed, except for official purposes, in accordance with judicial order or as otherwise provided by law. A commissioner or an employee of the commission who without authorization divulges confidential information shall be subject to disciplinary action by the commission.
§ 2314. Distribution of fee.
(a) Establishment.--There is established a fund in the State Treasury to be known as the Unconventional Gas Well Fund to be administered by the commission.
(b) Deposit.--All fees imposed and collected under this chapter shall be deposited into the fund and are hereby appropriated for the purpose set forth in this section.
(c) Conservation districts.--
(1) From fees collected for 2011, $2,500,000 from the fund shall be distributed to county conservation districts.
(2) From fees collected for 2012, $5,000,000 from the fund shall be distributed to county conservation districts.
(3) From fees collected for 2013, and each year thereafter, $7,500,000 from the fund shall be distributed to county conservation districts.
(4) Beginning July 1, 2014, each July 1 thereafter, the amount distributed under paragraph (3) shall be increased by any percentage increase in the Consumer Price Index for All Urban Consumers for the most recent 12-month period for which figures have been officially reported by the Bureau of Labor Statistics immediately prior to July 1.
(5) Funds under paragraphs (1), (2) and (3) shall be distributed in accordance with the following:
(i) One-half shall be distributed by dividing the amount equally among conservation districts for any use consistent with the act of May 15, 1945 (P.L.547, No.217), known as the Conservation District Law.
(ii) One-half shall be distributed by the State Conservation Commission in a manner consistent with the Conservation District Law and the provisions of the State Conservation Commission's Conservation District Fund Allocation Program-Statement of Policy under 25 Pa. Code Ch. 83 Subch. B (relating to Conservation District Fund Allocation Program-Statement of Policy).
(c.1) Additional distributions.--From fees collected under this chapter and deposited in the fund for 2011 and each year thereafter:
(1) One million dollars shall be distributed to the Pennsylvania Fish and Boat Commission for costs relating to the review of applications for permits to drill unconventional gas wells.
(2) One million dollars shall be distributed to the commission for costs to administer this chapter and Chapter 33 (relating to local ordinances relating to oil and gas operations).
(3) Six million dollars to the department for the administration of this act and the enforcement of acts relating to clean air and clean water.
(4) Seven hundred fifty thousand dollars to the Pennsylvania Emergency Management Agency for emergency response planning, training and coordination related to natural gas production from unconventional gas wells.
(5) Seven hundred fifty thousand dollars to the Office of State Fire Commissioner for the development, delivery and sustainment of training and grant programs for first responders and the acquisition of specialized equipment for response to emergencies relating to natural gas production from unconventional gas wells.
(6) One million dollars to the Department of Transportation for rail freight assistance.
(c.2) Natural gas energy development.--Following distributions from the fund under subsections (c) and (c.1), the following amounts shall be deposited into the Marcellus Legacy Fund for distribution to the department for the Natural Gas Energy Development Program under Chapter 27 (relating to Natural Gas Energy Development Program):
(1) For 2011, $10,000,000.
(2) For 2012, $7,500,000.
(3) For 2013, $2,500,000.
(c.3) Report.--All agencies or organizations receiving funds under subsections (c), (c.1) and (c.2) shall submit a report by December 31, 2012, and December 31 of each year thereafter to the Secretary of the Budget and the Appropriations Committee of the Senate and the Appropriations Committee of the House of Representatives. The report shall include an itemization and explanation of the use of all funds received under subsections (c), (c.1) and (c.2).
(d) Distribution.--Except as provided in section 2302(a.3) and (a.4) (relating to unconventional gas well fee), following fee distribution under subsections (c), (c.1) and (c.2), from fees collected for 2011 and each year thereafter, 60% of the revenue remaining in the fund from fees collected for the prior year are hereby appropriated to counties and municipalities for purposes authorized under subsection (g). Counties and municipalities are encouraged, where appropriate, to jointly fund projects that cross jurisdictional lines. The commission, after making a disbursement under subsection (f), shall distribute the remaining funds appropriated as follows within three months after the date the fee is due:
(1) Except as provided in section 2302(a.3), 36% shall be distributed to counties in which spud unconventional gas wells are located. The amount for each county to which funds will be distributed shall be determined using a formula that divides the number of spud unconventional gas wells in the county by the number of spud unconventional gas wells in this Commonwealth and multiplies the resulting percentage by the amount available for distribution under this paragraph.
(2) Except as provided in section 2302(a.4), 37% shall be distributed to municipalities in which spud unconventional gas wells are located. The amount for each municipality to which funds will be distributed shall be determined using a formula that divides the number of spud unconventional gas wells in the municipality by the number of spud unconventional gas wells in this Commonwealth and multiplies the resulting percentage by the amount available for distribution under this paragraph.
(3) Except as provided in section 2302(a.4), 27% shall be distributed to municipalities located in a county in which spud unconventional gas wells are located. The amount available for distribution in each county shall be determined by dividing the number of spud unconventional gas wells in the county by the number of spud unconventional gas wells in this Commonwealth and multiplying the resulting percentage by the amount available for distribution under this paragraph. The resulting amount available for distribution in each county in which spud unconventional gas wells are located shall be distributed to each municipality in the county to which funds will be distributed as follows:
(i) Except as provided in section 2302(a.4), 50% of the amount available under this paragraph shall be distributed to municipalities in which spud unconventional gas wells are located and to municipalities that are either contiguous with a municipality in which spud unconventional gas wells are located or are located within five linear miles of a spud unconventional gas well. The distribution shall be made as follows:
(A) One-half shall be distributed to each municipality using a formula that divides the population of the eligible municipality within the county by the total population of all eligible municipalities within the county and multiplies the resulting percentage by the amount allocated to the county under this subparagraph.
(B) One-half shall be distributed to each municipality using a formula that divides the highway mileage of the eligible municipality within the county by the total highway mileage of all eligible municipalities within the county and multiplies the resulting percentage by the amount allocated to the county under this subparagraph.
(ii) Except as provided in section 2302(a.4), 50% of the amount available under this paragraph shall be distributed to each municipality in the county regardless of whether an unconventional gas well is located in the municipality as follows:
(A) One-half shall be distributed to each municipality using a formula that divides the population of the municipality within the county by the total population of the county and multiplies the resulting percentage by the amount allocated to the county under this subparagraph.
(B) One-half shall be distributed to each municipality using a formula that divides the highway mileage of the municipality within the county by the total highway mileage of the county and multiplies the resulting percentage by the amount allocated to the county under this subparagraph.
(e) Restriction.--The amount allocated to each municipality under subsection (d) shall not exceed the greater of $500,000 or 50% of the total budget for the prior fiscal year beginning with the 2010 budget year and continuing every year thereafter, adjusted to reflect any upward changes in the Consumer Price Index for all Urban Consumers for the Pennsylvania, New Jersey, Delaware and Maryland area in the preceding 12 months. Any remaining money shall be retained by the commission and deposited in the Housing Affordability and Rehabilitation Enhancement Fund for the uses specified under subsection (f).
(f) Housing Affordability and Rehabilitation Enhancement Fund.--
(1) From fees collected for 2011, $2,500,000 from the fund shall be distributed to the Housing Affordability and Rehabilitation Enhancement Fund under the act of November 23, 2010 (P.L.1035, No.105), entitled "An act amending the act of December 3, 1959 (P.L.1688, No.621), entitled, as amended, 'An act to promote the health, safety and welfare of the people of the Commonwealth by broadening the market for housing for persons and families of low and moderate income and alleviating shortages thereof, and by assisting in the provision of housing for elderly persons through the creation of the Pennsylvania Housing Finance Agency as a public corporation and government instrumentality; providing for the organization, membership and administration of the agency, prescribing its general powers and duties and the manner in which its funds are kept and audited, empowering the agency to make housing loans to qualified mortgagors upon the security of insured and uninsured mortgages, defining qualified mortgagors and providing for priorities among tenants in certain instances, prescribing interest rates and other terms of housing loans, permitting the agency to acquire real or personal property, permitting the agency to make agreements with financial institutions and Federal agencies, providing for the purchase by persons of low and moderate income of housing units, and approving the sale of housing units, permitting the agency to sell housing loans, providing for the promulgation of regulations and forms by the agency, prescribing penalties for furnishing false information, empowering the agency to borrow money upon its own credit by the issuance and sale of bonds and notes and by giving security therefor, permitting the refunding, redemption and purchase of such obligations by the agency, prescribing remedies of holders of such bonds and notes, exempting bonds and notes of the agency, the income therefrom, and the income and revenues of the agency from taxation, except transfer, death and gift taxes; making such bonds and notes legal investments for certain purposes; and indicating how the act shall become effective,' providing for the Pennsylvania Housing Affordability and Rehabilitation Enhancement Program; and establishing the Housing Affordability and Rehabilitation Enhancement Fund." From fees collected for 2012, and each year thereafter, $5,000,000 shall be annually distributed to the Housing Affordability and Rehabilitation Enhancement Fund.
(2) Funds under paragraph (1) shall be used for the following purposes:
(i) To provide support to projects in a county in which producing unconventional gas wells are located that increase availability of quality, safe, affordable housing for low-income and moderate-income individuals or families, persons with disabilities or elderly persons.
(ii) To provide rental assistance in a county in which producing unconventional gas wells are located to persons or families whose household income does not exceed the area median income.
(3) No less than 50% of the funds available under this subsection shall be used in fifth, sixth, seventh and eighth class counties.
(g) Use of funds.--A county or municipality receiving funds under subsection (d) shall use the funds received only for the following purposes associated with natural gas production from unconventional gas wells within the county or municipality:
(1) Construction, reconstruction, maintenance and repair of roadways, bridges and public infrastructure.
(2) Water, storm water and sewer systems, including construction, reconstruction, maintenance and repair.
(3) Emergency preparedness and public safety, including law enforcement and fire services, hazardous material response, 911, equipment acquisition and other services.
(4) Environmental programs, including trails, parks and recreation, open space, flood plain management, conservation districts and agricultural preservation.
(5) Preservation and reclamation of surface and subsurface waters and water supplies.
(6) Tax reductions, including homestead exclusions.
(7) Projects to increase the availability of safe and affordable housing to residents.
(8) Records management, geographic information systems and information technology.
(9) The delivery of social services.
(10) Judicial services.
(11) For deposit into the county or municipality's capital reserve fund if the funds are used solely for a purpose set forth in this subsection.
(12) Career and technical centers for training of workers in the oil and gas industry.
(13) Local or regional planning initiatives under the act of July 31, 1968 (P.L.805, No.247), known as the Pennsylvania Municipalities Planning Code.
(h) Reporting.--
(1) The commission shall submit an annual report on all funds in the fund. The report shall include a detailed listing of all deposits and expenditures of the fund and be submitted to the chairman and the minority chairman of the Appropriations Committee of the Senate, the chairman and the minority chairman of the Environmental Resources and Energy Committee of the Senate, the chairman and the minority chairman of the Appropriations Committee of the House of Representatives and the chairman and the minority chairman of the Environmental Resources and Energy Committee of the House of Representatives. The report shall be submitted by December 30, 2012, and by September 30 of each year thereafter.
(2) All counties and municipalities receiving funds from the fund under this section shall submit information to the commission on a form prepared by the commission that sets forth the amount and use of the funds received in the prior calendar year. The form shall set forth that the funds received were committed to a specific project or use as authorized in this section. The reports shall be published annually on the county or municipality's publicly accessible Internet website.
(i) Availability of funds.--Distribution of funds under this section and section 2315 (relating to Statewide initiatives) are contingent on availability of funds in the fund. If sufficient funds are not available, the commission shall disburse funds on a pro rata basis.
References in Text. Chapter 27, referred to in subsec. (c.2), expired December 31, 2016.
Cross References. Section 2314 is referred to in sections 2302, 2303, 2315, 2702 of this title.
§ 2315. Statewide initiatives.
(a) Establishment.--There is established in the State Treasury a fund to be known as the Marcellus Legacy Fund.
(a.1) Deposit and distribution.--Following distribution under section 2314(c), (c.1) and (c.2) (relating to distribution of fee) from fees collected for 2011 and each year thereafter, 40% of the remaining revenue in the fund shall be deposited into the Marcellus Legacy Fund and appropriated to the commission and distributed within three months after the date the fee is due as follows:
(1) Twenty percent to the Commonwealth Financing Authority for grants to eligible applicants for the following:
(i) Acid mines: damage, abatement and cleanup and mine reclamation, with priority given to projects which recycle and treat water for use in drilling operations.
(ii) Orphan or abandoned oil and gas well plugging.
(iii) Complying with the act of January 24, 1966 (1965 P.L.1535, No.537), known as the Pennsylvania Sewage Facilities Act.
(iv) Planning acquisition, development, rehabilitation and repair of greenways, recreational trails, open space, parks and beautification projects.
(v) Programs to establish baseline water quality data on private water supplies.
(vi) Watershed programs and related projects.
(vii) Up to 25% of funds distributed to the Commonwealth Financing Authority under this paragraph may be utilized for flood control projects.
(2) Ten percent to the Environmental Stewardship Fund.
(3) Twenty-five percent to the Highway Bridge Improvement Restricted Account in the Motor License Fund to counties to be distributed to fund the cost of the replacement or repair of locally owned at-risk deteriorated bridges. Funds shall be distributed to counties proportionately based on the population of the county as follows:
(i) In each county, the distribution shall be according to the following formula:
(A) Divide:
(I) the total population of the county; by
(II) the total population of the Commonwealth;
(B) Express the quotient under clause (A) as a percentage.
(C) Multiply:
(I) the percentage under clause (B); by
(II) the amount of money to be distributed under this paragraph.
(ii) Each county shall receive a minimum of $40,000 to the extent funds are available.
(iii) The Department of Transportation shall release money under this paragraph upon approval of a plan submitted by a county or municipality to repair an at-risk deteriorated bridge. The plan must include funding for replacement or repair.
(iv) A county of the first or second class may submit a plan to use its funds under this paragraph for at-risk deteriorated bridges owned by a public transportation authority.
(4) Twenty-five percent for water and sewer projects. Fifty percent of the amount distributed under this paragraph shall be transmitted to the Pennsylvania Infrastructure Investment Authority to be used in accordance with the act of March 1, 1988 (P.L.82, No.16), known as the Pennsylvania Infrastructure Investment Authority Act. Fifty percent of the amount distributed under this paragraph shall be distributed to the H2O PA program to be used by the Commonwealth Financing Authority in accordance with section 301 of the act of July 9, 2008 (P.L.908, No.63), known as the H2O PA Act. The prohibition on grants for projects located in a city or county of the first or second class under section 301 of the H2O PA Act shall not apply to funds distributed to the H2O PA Program under this paragraph.
(5) Fifteen percent for 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 drainage by storms or flooding. Funds shall be distributed to counties proportionately based on the population of the county as follows:
(i) In each county, the distribution shall be according to the following formula:
(A) Divide:
(I) the total population of the county; by
(II) the total population of the Commonwealth.
(B) Express the quotient under clause (A) as a percentage.
(C) Multiply:
(I) the percentage under clause (B); by
(II) the amount of funds available under this paragraph.
(ii) Each county shall receive a minimum of $25,000 to the extent funds are available.
(6) Five percent for distribution as follows:
(i) From fees collected in 2011, 2012 and 2013, to the Department of Community and Economic Development for projects to provide for the planning, development, remodeling, remediation and construction of projects relating to oil, natural gas or other chemical substances. Projects under this subparagraph may include blending facilities to liquefy or refine natural gas or to convert natural gas to ethane, propane or other substances; facilities to refine oil; or facilities to refine or process oil, heating oil, jet fuel or any other chemical substance. Following 2014, funds not utilized by the Department of Community and Economic Development under this subparagraph shall be deposited in the Hazardous Sites Cleanup Fund.
(ii) After 2013, to the Hazardous Sites Cleanup Fund.
(b) Restriction on use of proceeds.--
(1) Funds distributed under subsection (a.1) shall not be used for the purpose of public relations, outreach not directly related to project implementation, communications, lobbying or litigation.
(2) Funds distributed under subsection (a.1) may not be used by an authorized organization as defined in 27 Pa.C.S. § 6103 (relating to definitions) for land acquisition unless the authorized organization has obtained the written consent of the county and municipality in which the land is situated.
(c) Coordination.--The department and the Department of Conservation and Natural Resources shall review applications for funding as requested by the Commonwealth Financing Authority and provide recommendations on priority of projects and project approval.
2013 Partial Repeal. Section 20(8) of Act 71 of 2013 provided that section 2315 is repealed insofar as it is inconsistent with the addition of section 1774.1-A of the act of April 9, 1929, P.L.343, No.176, known as The Fiscal Code.
Cross References. Section 2315 is referred to in sections 2302, 2314 of this title.
§ 2316. Small business participation.
(a) Requirement.--Producers shall provide maximum practicable contracting opportunities for diverse small businesses, including minority-owned business enterprises, women-owned business enterprises and veteran-owned businesses.
(b) Duties.--Producers shall do all of the following:
(1) Maintain a policy prohibiting discrimination in employment and contracting based on gender, race, creed or color.
(2) Use the database available on the Internet website of the Department of General Services to identify certified diverse small businesses, including minority-owned business enterprises, women-owned business enterprises and veteran-owned businesses, as potential contractors, subcontractors and suppliers for opportunities related to unconventional natural gas extraction.
(3) Respond to the survey under subsection (c) within 90 days.
(c) Survey.--Within one year of the effective date of this section, the Department of General Services shall send all producers a survey to report the producers' efforts to provide maximum practicable contracting opportunities related to unconventional natural gas extraction for diverse, small business participation.
(d) Reports.--The Department of General Services shall compile the results and submit an annual report to the State Government Committee of the Senate and the State Government Committee of the House of Representatives on the utilization of diverse small business participation related to unconventional natural gas extraction. The report shall be submitted no later than 150 days after the Department of General Services disseminated the survey to producers.
(e) Definition.--As used in this section, the term "diverse small business" means minority-owned business, women-owned business and veteran-owned business as determined by the Department of General Services.
§ 2317. Applicability.
The provisions of this chapter shall not negate or limit the responsibilities of any producer under this title, 74 Pa.C.S (relating to transportation) or 75 Pa.C.S. (relating to vehicles).
§ 2318. Expiration.
(a) Notice.--The Secretary of the Commonwealth shall, upon the imposition of a severance tax on unconventional gas wells in this Commonwealth, submit for publication in the Pennsylvania Bulletin notice of the imposition.
(b) Date.--This chapter shall expire on the date of the publication of the notice under subsection (a).