THE GENERAL   ASSEMBLY OF PENNSYLVANIA

HOUSE BILL

Report of the Committee of Conference

To the Members of the House of Representatives and Senate:

We, the undersigned, Committee of Conference on the part of the Senate and House of Representatives for the purpose of considering House Bill No. 1950, entitled:

"An act amending Titles 27 (Environmental Resources) and 58 (Oil and P1:L2Gas) of the Pennsylvania Consolidated Statutes, * * *.

Amending Title 58 (Oil and Gas) of the Pennsylvania Consolidated Statutes, * * * and P2:L7making a related repeal,"

respectfully submit the following bill as our report:

BRIAN L. ELLIS

DAVID L. REED

(Committee on the part of the House of Representatives.)

JOSEPH B. SCARNATI

MARY JO WHITE

(Committee on the part of the Senate.)

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AN ACT

Amending 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 General Assembly of the Commonwealth of Pennsylvania

hereby enacts as follows:

Section 1.  Title 58 of the Pennsylvania Consolidated

Statutes is amended by adding parts to read:

PART I

(RESERVED)

PART II

OVERSIGHT AND DEVELOPMENT

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.

§ 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.

§ 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.

§ 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.

§ 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 the 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 the 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)  $1,000,000 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)  $1,000,000 shall be distributed to the Public

Utility Commission for costs to administer this chapter and

Chapter 33 (relating to local ordinances relating to oil and

gas operations).

(3)  $6,000,000 to the department for the administration

of this act and the enforcement of acts relating to clean air

and clean water.

(4)  $750,000 to the Pennsylvania Emergency Management

Agency for emergency response planning, training and

coordination related to natural gas production from

unconventional gas wells.

(5)  $750,000 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)  $1,000,000 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.

§ 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.

§ 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